<?xml version="1.0" encoding="utf-8"?>
<ManualTopic ID="/baanerp/cp/onlinemanual/000344" xml:lang="en">
	<Header>
		<Title xmlns:ssa="http://www.ssaglobal.com" xmlns:HTML="http://www.w3.org/TR/REC-html40">Example of a weighted average of a negative inventory level</Title>
		<Keyword><Level1>Weighted average of inventory level</Level1>
		</Keyword>
		<Keyword><Level1>Negative inventory level</Level1>
		</Keyword>
	</Header>
	<AimSection><Paragraph>The average negative projected inventory level is one of the performance indicators of the <Link href="/baanerp/cp/onlinemanual/cprao" role="manual">Resource Analysis and Optimization (RAO)</Link> module of <Link href="/baanerp/cp/onlinemanual/cp" role="manual">Enterprise Planning</Link>.</Paragraph>
	</AimSection>
	<GeneralSection><Paragraph>The computation of the average negative projected inventory level is based on principles similar to those of the average projected inventory computation. An important difference, however, is that for the computation of average negative inventory, SSA ERP only considers those stretches of time during which the projected inventory is negative.</Paragraph>
		<Paragraph>Once the exact periods of negative inventory level have been determined, SSA ERP computes the average negative projected inventory. In other words, a weighted average is computed that takes the length of the various periods with negative inventory into account.</Paragraph>
		<ExampleSection><SectionTitle>Example</SectionTitle>
			<Paragraph>Inventory on hand = 10</Paragraph>
			<TABLE border="1"><TBODY><TR><TD>Plan period</TD>
						<TD>1</TD>
						<TD>2</TD>
						<TD>3</TD>
						<TD>4</TD>
					</TR>
					<TR><TD>Length of plan period (days)</TD>
						<TD>2</TD>
						<TD>2</TD>
						<TD>5</TD>
						<TD>5</TD>
					</TR>
					<TR><TD>Projected (end) inventory</TD>
						<TD>30</TD>
						<TD>-10</TD>
						<TD>-20</TD>
						<TD>60</TD>
					</TR>
					<TR><TD>Days with negative inventory</TD>
						<TD>0</TD>
						<TD>0.5</TD>
						<TD>5</TD>
						<TD>1.25</TD>
					</TR>
					<TR><TD>Average negative inventory</TD>
						<TD></TD>
						<TD>5</TD>
						<TD>15</TD>
						<TD>10</TD>
					</TR>
				</TBODY>
			</TABLE>
		</ExampleSection>
		<ProcedureSection><SectionTitle>Calculation method</SectionTitle>
			<Steps><Step><StepTitle></StepTitle>
					<Paragraph>For plan periods in which there is a shift from positive to negative or from negative to positive, the number of days with negative inventory is computed as follows:</Paragraph>
					<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">
     |N| 
  --------- * Days 
   |N| + P
</Paragraph>
						<FigLegend><LegendEntry><Symbol>|N|</Symbol>
								<Desc>The negative inventory level (expressed as a positive	figure)</Desc>
							</LegendEntry>
							<LegendEntry><Symbol>P</Symbol>
								<Desc>The positive inventory level</Desc>
							</LegendEntry>
							<LegendEntry><Symbol>Days</Symbol>
								<Desc>The number of days of the plan period</Desc>
							</LegendEntry>
						</FigLegend>
					</Formula>
					<Paragraph>In the case of a shift from positive to negative inventory, NegLevel is the end level of the plan period, while PosLevel is the starting level (equal to the end level of the previous plan period). When the shift if from negative to positive inventory, these roles are reversed.</Paragraph>
				</Step>
				<Step><StepTitle></StepTitle>
					<Paragraph>The average negative inventory for a plan period is computed as follows:</Paragraph>
					<Formula><Paragraph UserLevel="Novice" UserType="Taskuser"> 
   |N| 
  -----
    2
</Paragraph>
						<FigLegend><LegendEntry><Symbol>|N|</Symbol>
								<Desc>The negative inventory level (expressed as a positive	figure)</Desc>
							</LegendEntry>
						</FigLegend>
					</Formula>
				</Step>
				<Step><StepTitle></StepTitle>
					<Paragraph>Now, SSA ERP can compute a weighted average negative inventory for all plan periods according to the following formula:</Paragraph>
					<Formula><Paragraph UserLevel="Novice" UserType="Taskuser">
  (ANI(pp1) * NegDays(pp1)) + (ANI(pp2) * NegDays(pp2)) ... 
 -----------------------------------------------------------
	               			  Sum(NegDays)
</Paragraph>
						<FigLegend><LegendEntry><Symbol>ANI(pp1)</Symbol>
								<Desc>The average negative inventory for plan period 1</Desc>
							</LegendEntry>
							<LegendEntry><Symbol>NegDays(pp1)</Symbol>
								<Desc>The number of negative inventory days in plan period 1</Desc>
							</LegendEntry>
							<LegendEntry><Symbol>Sum(NegDays)</Symbol>
								<Desc>The total (round) number of days with negative inventory</Desc>
							</LegendEntry>
						</FigLegend>
					</Formula>
				</Step>
			</Steps>
		</ProcedureSection>
		<Paragraph>The NegDays figures for the various plan periods (see Step 1) are decimal values. These values are added up and the outcome is rounded upwards, yielding the value for Sum(NegDays).</Paragraph>
		<Paragraph>In this example, the weighted average negative inventory level is computed as follows:</Paragraph>
		<Formula><Paragraph UserLevel="Novice" UserType="Taskuser"> 
   (5 x 0.5) + (15 x 5) + (10 x 1.25)      90
	 ------------------------------------ = ------ = 13.33 
           0.5 + 5 + 1.25             		  6.75
</Paragraph>
		</Formula>
	</GeneralSection>
	<RelatedTopics><SectionTitle>Related topics</SectionTitle>
		<RelTopic><Link href="/baanerp/cp/onlinemanual/000048" role="manual">To compute average projected-inventory levels</Link>
		</RelTopic>
		<RelTopic><Link href="/baanerp/cp/onlinemanual/000310" role="manual">Performance indicators in Enterprise Planning</Link>
		</RelTopic>
		<RelTopic><Link href="/baanerp/cp/onlinemanual/000342" role="manual">Example of linear progression</Link>
		</RelTopic>
		<RelTopic><Link href="/baanerp/cp/onlinemanual/000343" role="manual">Example of a weighted average of the inventory level</Link>
		</RelTopic>
	</RelatedTopics>
</ManualTopic>
