Quota Calculation and Application

There are three ways to calculate a quota: 

·     By using the rank/limit of rank method

·     By using the planned quantity not accounted for

·     By using the planned quantity

The rank/limit of rank method favors “preferred” vendors and allows you to promise regular schedules to the preferred vendors according to the negotiated quantity.  This is the most straightforward method and is probably the best to use for “simple” relationships with vendors.  For example, if you always purchase an item from the same vendor, this is the most appropriate method to use.

The planned quantity not accounted for is the difference between the 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 either the total order quantity or the total received quantity.  This amount is subtracted from the planned quantity to produce the planned quantity not accounted for.

The planned quantity is the quantity that is expected to be purchased from the vendor with a purchase order.  The quantity is defined and maintained in the Endorsement Maintenance conversation.

Rank/Limit of Rank

The third formula uses Rank and Limit of Rank.  This policy favors “preferred” vendors and allows you to promise regular schedules to the preferred vendors according to the negotiated quantity (Limit of Rank).  This is the most straightforward method and is probably the best to use for “simple” relationships with vendors.  For example, if you always purchase an item from the same vendor, this is the most appropriate method to use. 

The rank and the limit of rank that are defined and maintained on the endorsement are used as follows: 

The rank has a value between 1 and 5.  The requisition quantity will be fully allocated to the endorsement with the lowest rank if the quantity of the requisition is less than or equal to the limit of rank.  If the quantity of the requisition is greater than the limit of rank, the allocated quantity is equal to the limit of rank.  The allocation of the remaining quantity continues with the endorsement with the next lowest rank.  When the endorsement with the lowest rank is totally filled, the allocation continues with the endorsement with the next lowest rank.

For example, the allocation for a requisition with a non-covered quantity of 32,000 will occur as follows:

Quota Calculation - Planned Quantity Not Accounted for

The second formula uses the planned quantity not accounted for per endorsement.  This formula favors vendors who have not met their expected planned quantity; therefore, the system will allocate planned requisitions accordingly (the greater of the total ordered quantity or the total received quantity).  The calculation for this method is:

Example - Planned Quantity Not Accounted For

Assume that the combined planned quantity for the three vendors is 100,000, the maximum of the total ordered quantity and the total received quantity is 2,000, and the requisition quantity is 3,000.

With the Planned Quantity Not Accounted for calculation, the following quantities will be allocated to the vendors.

Quota Calculation - Planned Quantity

The first computation uses the planned quantity predicated for each endorsement 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:

Example - Planned Quantity

Assume that the combined planned quantity for the three vendors is 100,000, and the requisition quantity is 3,000.

With the planned quantity calculation, the following quantities will be allocated to the vendors.