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Quota Calculation and Application
Quota Calculation and Application
During vendor allocation, quotas are calculated to determine the amount of purchase requisition lines to be allotted to the first ten authorized vendors. In order to be an authorized vendor, all of the following conditions must be met:
1. The vendor must be active and have a blank hold code,
2. The Item/Vendor Relationship must be active and the relationship hold code must = N,
3. The Item/Vendor Planned Quantity must not equal zero,
4. There must be at least one open, valid Purchase Order Line with the following characteristics:
· The Line Status must be 'Open' and must be part of a Blanket Purchase Order, which has an Order Type of W,
· The line validity dates must be consistent with the requisition due date,
· The YTD Received Quantity as well as the YTD Ordered Quantity must not be greater than the Planned Quantity established on the Item/Vendor Relationship.
There are two ways to calculate this quota: using the Planned Quantity or the Planned Quantity Not Accounted For.
The Planned Quantity is the annual quantity expected to be purchased from the vendor. This amount is defined and maintained in the Item/Vendor Relationship conversation.
The Planned Quantity Not Accounted For is the difference between Planned Quantity and the amount of that Planned Quantity that has already been acted upon. The Planned Quantity already accounted for is the greater of the YTD Quantity Received or the YTD Ordered Quantity. This amount is subtracted from the Planned Quantity to produce the Planned Quantity Not Accounted For. For instance, if the Planned Quantity for Vendor A is 100 units, the Ordered Quantity is 75 units and the Quantity Received is 50 units, the Planned Quantity which has already been accounted for is 75 units and the Quantity Not Accounted For is 25 units.
Once calculated, the quota is rounded to the second digit and used both to calculate the quantity allocated to vendors as well as to update the Percent Allocation field. The Percent Allocation field represents the last percentage calculated for that vendor. This field can be accessed on the Item/Vendor Relationship screen.
Using Vendor Allocation
The first computation uses the Planned Quantity predicted for each Item/Vendor. This policy favors "preferred" vendors; vendors who are expected to provide the highest percentage of units. The formula for this method of calculation is:
|
Vendor Quota
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=
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Vendor Planned Quantities
|
|
|
|
Sum of Vendors' Planned Quantities
|
The second formula uses the Planned Quantity Not Accounted For per Item/Vendor. This policy favors vendors that have not met their expected planned quantity. This amount is determined to be the difference between the Planned Quantity and the amount of that Quantity which has been accounted for (the greater of the Received Quantity or the Ordered Quantity). The calculation for this method is:
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Vendor Quota
|
=
|
Planned Quantity Not Accounted For
|
|
|
|
Sum of Vendors' Planned Quantities
|
minus
|
Sum of Planned Quantities Accounted For
|
|
Example - Quota Calculation
Given the following information, the allocation quota for Vendor B would be calculated as follows:
|
|
|
|
|
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Pln Qty Not
Accounted
For
|
Quota by
Planned
Quantity
|
|
|
A
|
200
|
150
|
100
|
150
|
50
|
.10
|
.07
|
|
B
|
400
|
100
|
175
|
175
|
225
|
.20
|
.31
|
|
C
|
600
|
250
|
200
|
250
|
350
|
.30
|
.48
|
|
D
|
800
|
700
|
500
|
700
|
100
|
.40
|
.14
|
|
Total
|
2000
|
|
|
|
|
|
|
TABLE 1
Vendor B
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Quota by Planned Quantity:
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400
|
=
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.20
|
|
|
|
(200 + 400 + 600 + 800)
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|
|
Vendor B
|
Quota By Planned Quantity Not Accounted For:
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(400 - 175)
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=
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.31
|
|
|
|
[2000 - (150 + 175 + 250 + 700)]
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|
|
In order to calculate the allocation quantity, the requisitioned quantity is multiplied by each of the vendors' quota. In this case, if a requisition line for 100 units was being allocated to Vendor B, 20 units would be ordered using the Planned Quantity method. Using the Planned Quantity Not Received method, 31 units would be ordered.
Examples - Quota Application to Requisitions
When applying quotas to requisitions, each requisition line is considered separately. The allocation amount is the quota percentage multiplied by the requisition line amount. Furthermore, regardless of which Requisition Allocation method is selected (by Item or by Requisition), the releases are generated for the same amount. This is because the quota is multiplied by the requisition line amount, which will not change. Differences between the two Requisition Allocation methods will be discussed in the next section.
Using the following information, note how the use of each quota calculation method produces a different outcome in the allocation of requisition lines.
The vendor used in both instances is Vendor B. In Example 1, the quota has been calculated using the Planned Quantity . In Example 2, the quota was determined using the Planned Quantity Not Accounted For.
Example 1 - Quota Calculation by Planned Quantity
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|
|
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Planned Qty Not
Accounted
For
|
Quota by Planned
Quantity
|
Quota by
Pln Qty Not
Acctd For
|
|
A
|
200
|
150
|
100
|
50
|
.40
|
.21
|
|
B
|
300
|
100
|
110
|
190
|
.60
|
.79
|
TABLE 2
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|
|
|
|
|
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R1
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Tires
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Y
|
Y
|
75
|
|
R2
|
Tires
|
Y
|
Y
|
100
|
|
R3
|
Tires
Seats
|
Y
N
|
Y
Y
|
200
100
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TABLE 3
Vendor B
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Quota Application:
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(R1)
|
75 * .60
|
=
|
45 tires
|
|
|
(R2)
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100 * .60
|
=
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60 tires
|
|
|
(R3)
|
200 * .60
|
=
|
120 tires
|
Note: Even though R3 had two line items, the second line was not processed because it did not meet the processing requirements.
Example 2 - Quota Calculation by Planned Quantity Not Accounted For
The next example will use the same data as the first. This time requisition lines will be calculated based on the Planned Quantity Not Accounted For. Notice how the PO releases generated from the requisition lines change.
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|
|
|
|
Planned Qty Not
Accounted
For
|
Quota by
Planned
Quantity
|
Quota by
Pln Qty Not
Acctd For
|
|
A
|
200
|
150
|
100
|
50
|
.40
|
.21
|
|
B
|
300
|
100
|
110
|
190
|
.60
|
.79
|
TABLE 2
|
|
|
|
|
|
|
R1
|
Tires
|
Y
|
Y
|
75
|
|
R2
|
Tires
|
Y
|
Y
|
100
|
|
R3
|
Tires
Seats
|
Y
N
|
Y
Y
|
200
100
|
TABLE 3
Vendor B
Quota Application: (R1) 75 * .79 = 59 tires
After this calculation, Table 2 will change to reflect the new YTD Ordered Quantity before the next requisition line (R2) is processed. This change will effect the quota if the YTD Ordered Quantity is increased enough that it is now greater than the YTD Received Quantity. Since that is the case for Vendor B, the quota needs to be recalculated. The new quota will be applied to the next requisition line. Refer to Table 2a.
|
|
|
|
|
Planned Qty
Not
Accounted
For
|
Quota by
Planned
Quantity
|
Quota by
Pln Qty Not
Acctd For
|
|
A
|
200
|
166
|
100
|
34
|
.40
|
.19
|
|
B
|
300
|
159
|
110
|
141
|
.60
|
.81
|
TABLE 2a
Vendor B
Quota Application: (R2) 100 * .81 = 81 tires
After this calculation, Table 2a changes again before the next requisition line is processed. Refer to Table 2b.
|
|
|
|
|
Planned Qty
Not
Accounted
For
|
Quota by
Planned
Quantity
|
Quota by
Pln Qty Not
Acctd For
|
|
A
|
200
|
185
|
100
|
15
|
.40
|
.20
|
|
B
|
300
|
240
|
110
|
60
|
.60
|
.80
|
TABLE 2b
Vendor B
Quota Application: (R3) 200 * .80 = 160 tires
The next time the quota is calculated, the Planned Quantity Accounted For will be greater than the Planned Quantity, and Vendor B would no longer be eligible for allocation. If there were any outstanding requisition lines, the program would allocate them among other eligible vendors.
Considerations
If Vendor Allocation is requested, each planned requisition on the system will be affected. The Vendor Allocation request does not allow specific requisition selection (i.e. by part or by vendor).
When calculating quotas, if one of the elements in the denominator is negative, it is computed as zero. This would be the case if the Planned Quantity Accounted For was greater than the Planned Quantity.
When selecting vendors, the program will process the top ten vendors, chosen by descending Planned Quantity. The quota percentage is only calculated for those selected vendors. Therefore, in order to allocate the entire requisition, the percentage applied to the last vendor will be 100 less the sum of the other 9 vendors' percentages.