When running a business, knowing when to order more inventory and how much to order is important. Otherwise, it could lead you to being overstocked or unable to make sales. Setting a ROP and EOQ helps you optimize your inventory management, replenish your stock of items at the right time, prevents your business from being over or understocked, and contrubutes to meeting your business demands without needing to stress over inventory levels
What Is ROP and EOQ?
ROP (or Reorder Point) is the minimum level at which your items will need to be replenished. To put it plainly, it tells you when you should place an order to avoid running out of inventory.
EOQ (or Economic Order Quantity) is a cost effective way of determining the quantity of items to be purchased based on two parameters: the cost of holding inventory and the cost of purchasing the item. In other words, ROP tells you when to buy items where as EOQ tells you how much to buy.
In ServiceWorks, if your ROP drops below the preset value for an inventory item, it will automatically add the item into the Items Needed page for ordering.
You’ll need to calculate when to order an item (ROP) and how much of the item to order (EOQ) separately, as they may sell and resupply at different rates.
To view and set an item’s ROP & EOQ within ServiceWorks, you’ll need to do the following:
From the home screen, hover over the Inventory section of the toolbar and select Item from the drop down menu.
In the following Inventory Item View menu, click the three dots at the end of the item you wish to set the ROP & EOQ for and select Edit from the drop down box.
Now that you have reached the inventory edit menu, you can set the ROP and EOQ for each item in the field on the right underneath Location. Once the respective values have been set, make sure to hit Save before exiting the menu.
Once you have your ROP & EOQ number set for your items, you will need to enable the automatic notifications for them as well. This will remind you to place an order for the items needed to meet the ROP & EOQ values. In order to do so, refer to the following steps:
Navigate to Configuration -> Purchase Order Setting to reach the Reorder Point Notification Settings.
You will need to make sure the Send Email check box is enabled so that the emails will send to the designated account (Note: The ROP notification email will send to the email address designated within the Site Settings). You can also set the time notifications are sent as well as the intervals between sent notifications. Remember to save before navigating away from the menu.
Lastly, you’ll need to navigate to Configuration -> Notificaton -> Preference to enable ROP Email notifications