Group Settings for Forecasting and Purchase Orders

This guide explains Group Settings, which organise your products and apply rules to streamline inventory forecasting and purchase order (PO) creation. Below are the key settings and how they work.

What Are Group Settings?

Group Settings hold your products and define how they’re managed. These settings directly influence forecasting, helping you create POs faster by setting stock levels, valuation methods, and cycles.

Key Settings Explained

Stock Type

What It Is: The type of product in the group (e.g., raw materials, finished goods).
Why It Matters: Categorises inventory for better tracking and forecasting.

Stock Valuation Method

What It Is: How the system prices inventory for POs.
Options:
- FIFO (First In, First Out): Uses the actual cost (AC) paid for the earliest inventory purchased. Typically the most accurate for POs.
- Average: Uses the product’s Moving Average Cost (MAC), blending costs over time. The MAC is also added to the PO.
Tip: FIFO is precise; Average is simpler—choose based on your needs.

Stock Cycle Days

What It Is: How often (in days) you should perform a stock count.
Example: Set to 30 means a stock take every 30 days.
Why It Matters: Keeps your inventory records accurate.

Target Stock Days

What It Is: How many days’ worth of stock you want to keep on hand.
Example: Set to 45 means maintaining 45 days of inventory.
Why It Matters: Balances stock levels to meet demand without overstocking.

Look Back Days

What It Is: How many days of historical data the system uses to calculate Target Stock Days.
Example: Set to 90 means it looks at the past 90 days.
Why It Matters: Ensures forecasting reflects recent usage trends.

Safety Stock

What It Is: The minimum stock to hold back as a buffer.
Example: Set to 100 units reserves 100 units.
Why It Matters: Prevents stockouts during delays or demand spikes.

How It Ties Together

These settings work together to optimise inventory and automate POs:

Stock Type organises products.
Stock Valuation Method sets pricing.
Stock Cycle Days, Target Stock Days, Look Back Days, and Safety Stock determine when and how much to reorder.

Adjust these to fit your business, and forecasting will help you create POs efficiently.