Keep Firm Orders Separate from Replenishment Scenarios

Before calculating a replenishment quantity, decide what each demand number contains. A customer commitment, a record of past usage and a future planning scenario are different forms of evidence. They cannot be added merely because all three are expressed in units of the same item.

Create a demand-basis and overlap register. Its job is to identify which future needs are distinct, which already appear in another number and which are alternative assumptions. This article supplies an original administrative method, not a forecast model. Actual customer commitments, usage history and buyer-approved planning rules have not been supplied.

Name the evidence behind every figure

Use “firm” only when the relevant owner can point to an approved obligation and its current scope. Retain the commitment reference, item, quantity, required date, amendments and any conditions relevant to planning. The worksheet does not decide whether a contract is enforceable or whether a customer may cancel.

Label historical quantities as history. State the period and what the record measures: an order placed, an item issued or another defined event. Do not silently transform last month’s activity into next month’s obligation. If someone proposes a future scenario using historical information, preserve the scenario as a separate assumption and identify its author.

For planning assumptions, record the scenario’s purpose and membership. “60 units next period” is incomplete. Does it include existing orders, represent additional uncommitted need, or describe a total alternative to another scenario? If the author cannot answer, the figure is not ready to combine with firm demand.

A useful register can include uncertain requests without treating them as approved demand. Preserve their origin, status and next decision, and keep their quantities outside the accepted basis until the owner resolves how they should be used.

Align the period, item and unit

Define the future period using explicit start and end cutoffs. Specify whether dates mean requirement dates, order-entry dates or another event. A commitment entered during this period but needed later should not drift into the current requirement total merely because the record is recent.

Use the approved item identity and a consistent unit. A requirement for individual brackets and an assumption stated in sets need a verified conversion before comparison. An uncertain conversion is an open input, not a reason to choose a convenient multiplier. This workflow accepts an established unit basis; it does not replace receipt counting or supplier pack confirmation.

Handle requirements that cross the cutoff with explicit split rows. Preserve the parent reference as a non-additive summary so the whole commitment and its dated portions are not both counted. If an undated request cannot be assigned reliably, show it separately with an owner responsible for the missing date.

Trace overlaps to identifiable requirements

Look first for exact duplicate references, then for revisions and summaries. Two messages may describe the same requirement at different stages. A later approved revision may replace an earlier quantity; a scenario summary may already contain the detailed firm rows listed below it.

Assign a membership statement to each scenario. For example: “Total scenario A includes all 40 units of firm obligations F-1 and F-2 plus 20 additional assumed units.” That is more useful than calling the scenario “optimistic” or “base,” because another reviewer can test the addition.

Where only part of a firm obligation is included, identify that part. Do not infer overlap from a matching number alone. Two unrelated customers can each require 20 units; one customer can also appear twice under different administrative references. The links, dates and approved scope establish whether quantities represent the same need.

Worked example: forty firm units inside sixty

Assume two fictional approved requirements for passive organizer parts total 40 units within one defined future period. Planning scenario A is 60 units for that same item and period. Its author explicitly states that the 60 already includes those 40 firm units.

The decomposition is 40 firm plus 20 additional assumed units, totaling 60. Adding 40 to 60 would produce 100, but that would count the same firm requirements twice. There is no new 40-unit requirement supporting the extra addition.

Now suppose the owner also wants to test scenario B at 100 units. Record B separately as 40 firm plus 60 additional assumed units. A and B are alternative total-demand cases, not additive rows. Neither is described as measured future demand or assigned an invented probability.

Consider a different statement: “60 additional units beyond the 40 already committed.” That wording describes an incremental assumption and gives a 100-unit total. The arithmetic is the same as the mistaken addition above, but the membership is different. The register must retain the statement that makes addition appropriate, rather than judging correctness from the result alone.

If a later amendment reduces the firm total from 40 to 30, ask whether scenario A’s additional assumption stays at 20 or whether its total remains 60 under a revised composition. Those alternatives produce 50 and 60 respectively. Do not automatically change both fields and hide the planning judgment involved.

Carry the same demand set into inventory arithmetic

The approved demand basis must match the stock position used with it. If 12 units have already been removed from available supply to protect part of a firm requirement, remove only that same covered 12 from remaining demand. Retain the uncovered balance and its date.

Alternatively, a calculation may retain the reserved stock in supply and include the full associated requirement in demand. Either representation can be readable when explicitly defined. Mixing the reduced supply from one representation with the full demand from the other creates duplicate netting.

Keep reservation changes separate from demand approval. Deciding that a scenario includes a customer order does not authorize releasing that customer’s stock, changing priority or reallocating units to another obligation. Those actions need their own authority and current records.

Approve a basis, not a sales prediction

Give the decision owner a short summary: included firm demand, additional assumption by scenario, excluded history, unresolved overlap and the version proposed for planning. Show unresolved membership directly rather than burying it in a footnote below a precise total.

Freeze the accepted version for the next calculation and retain the superseded version. Reopen it when a commitment changes, a date moves or an assumption’s membership is corrected. The objective is a reproducible input, not a claim that future consumption is certain.

This register stops before reorder triggers, review-interval calculations, supplier minimums and purchasable pack rounding. It defines the demand each of those later decisions may use without manufacturing additional need from repeated descriptions.

Frequently asked questions

Should firm orders always be added to a planning forecast?

Only when the proposed planning figure explicitly excludes them. If a 60-unit scenario already contains 40 firm units, total demand under that scenario remains 60. Ask the scenario owner to identify included commitments and incremental assumptions before adding any quantities.

Can historical sales be treated as firm future demand?

Historical activity describes a defined past period and event. It does not by itself establish a future obligation. An owner can propose a planning scenario informed by that history, but its quantity, period and relationship to current commitments must remain explicitly labelled assumptions.

What if I cannot tell whether two records overlap?

Keep the relationship unresolved and ask the source owner to identify the requirement references, revisions and covered quantities. Do not add both as a precaution or discard one because the numbers match. Either choice can distort the planning basis without resolving the evidence gap.

How should reservations affect the demand register?

Record whether the corresponding stock position has already removed the reserved quantity. If it has, exclude the same covered requirement quantity from remaining demand so it is not deducted twice. Demand classification alone does not authorize releasing or reassigning the reservation.