Reorder policies in Microsoft Dynamics 365 Business Central control how the system plans your items, including which quantities to order and which due dates to use. You set the reorder policy on the planning tab of the item card, or you can override it on the stock-keeping unit card to define planning parameters per item and per location.
Business Central offers four reorder policies: Fixed Reorder Qty., Maximum Qty., Order, and Lot-for-Lot. Fixed Reorder Qty. works as a min-max calculation using a reorder point and reorder quantity. Maximum Qty. fills the inventory up to a defined maximum level. Order plans one-to-one per demand. Lot-for-Lot accumulates demands within a defined period and combines them into one order.
The safety stock quantity is a general field that applies to both fixed reorder quantity planning and lot-for-lot planning.
Where to set the reorder policy in Business Central
You set the reorder policy on the item card. Open the item and scroll to the planning tab. This is where you decide how you want to plan the item, meaning which quantities to order and which due dates to plan for. The reorder policy is the field at the top of the section.
From here you can choose between four policies: Fixed Reorder Qty., Maximum Qty., Order, and Lot-for-Lot.
Fixed Reorder Qty. policy and min-max planning
If you select Fixed Reorder Qty., you add a reorder point and a reorder quantity. This is the normal min-max calculation. When the system plans and an item hits the reorder point, it creates an order for the reorder quantity.
You often want to use the safety stock quantity together with this policy. The safety stock field sits among the general fields because it also applies to lot-for-lot planning, not just to fixed reorder quantity.
Maximum Qty. policy and its limitations
The Maximum Qty. policy uses the same fields as Fixed Reorder Qty., except that instead of a reorder quantity you define a maximum inventory level. The idea is to fill the inventory up to the maximum you define. When you plan, the system tries to fill the inventory as much as possible.
Not many customers use this policy. In theory it does not always make sense, because planning looks ahead. You might exceed the maximum inventory level with this kind of planning, and then you have limited ways to keep the item below that level.
Order policy for one-to-one planning
The Order policy plans per each demand. Every time there is a demand, the system creates a separate order for the specific item. It is a one-to-one relationship between demand and order, and it is the simplest policy to understand.
Lot-for-Lot policy for combining demands
The Lot-for-Lot policy adds demands together. It looks at all the demands within the lot accumulation period you define, adds them together, and combines them into one order. It can also take safety stock and inventory into account if you select that.
Overriding the reorder policy per location with stock-keeping units
If you go to the stock-keeping unit card, you can override the reorder policy from the item card. This lets you define more specific planning parameters per item and per location. For example, you can take item 1000 on location SILVER 1 and decide how you want to plan that combination more specifically.
Q&A
Where do you set the reorder policy in Business Central?
You set the reorder policy on the item card. Open the item and scroll to the planning tab, where the reorder policy is the field at the top of the section.
What are the four reorder policies in Business Central?
The four reorder policies are Fixed Reorder Qty., Maximum Qty., Order, and Lot-for-Lot.
How does the Fixed Reorder Qty. policy work?
It works as a min-max calculation using a reorder point and a reorder quantity. When an item hits the reorder point during planning, the system creates an order for the reorder quantity.
What is the difference between the Order policy and the Lot-for-Lot policy?
The Order policy plans one-to-one and creates a separate order for every demand. The Lot-for-Lot policy adds together all demands within the lot accumulation period and combines them into one order.
Why do few customers use the Maximum Qty. policy?
Because planning looks ahead, you might exceed the defined maximum inventory level, and you have limited ways to keep the item below that level. For that reason it does not always make sense in practice.
Can you set a different reorder policy per location?
Yes. On the stock-keeping unit card you can override the reorder policy from the item card and define more specific planning parameters per item and per location.
Does the safety stock quantity apply to more than one reorder policy?
Yes. The safety stock quantity is a general field that applies to both fixed reorder quantity planning and lot-for-lot planning.