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<ManualTopic ID="/baanerp/cp/onlinemanual/000048" xml:lang="en">
   <Header>
      <Title>To compute average projected-inventory levels</Title>
      <Keyword type="header" order="d1e198722">
         <Level1>Average projected inventory</Level1>
         <Level2>computing</Level2>
      </Keyword>
      <Keyword type="header" order="d1e198727">
         <Level1>Performance indicators</Level1>
         <Level2>average projected inventory</Level2>
      </Keyword>
   </Header>
   <GeneralSection>
      <Paragraph>Several performance
		indicators in the <GUIRef href="/baanerp/cp/rao" role="module">Resource Analysis and Optimization</GUIRef> module of <GUIRef href="/baanerp/cp" role="package">Enterprise Planning</GUIRef> are
		computed as an average measure of the level or value of the projected
		inventory. This applies to the following indicators:</Paragraph>
      <List>
         <ListItem>The average projected
		  inventory for a plan item or a range of plan items</ListItem>
         <ListItem>The average value of the
		  projected inventory for a plan item or a range of plan items</ListItem>
         <ListItem>The average negative
		  projected inventory for a plan item or a range of plan items</ListItem>
      </List>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Average projected inventory quantity</SectionTitle>
      <Paragraph>The projected inventory
		for a plan period, which is displayed in the <GUIRef href="/baanerp/cp/rmp/cprmp2101m000" role="session">Item Master Plan (cprmp2101m000)</GUIRef> session, is actually the projected inventory at the
		end of that plan period. For the purposes of computing average projected
		inventory levels, ERP Enterprise assumes that changes of inventory level from one plan period to the next
		proceed in a linear fashion.</Paragraph>
      <Paragraph>Refer to online manual topic <Link href="/baanerp/cp/onlinemanual/000342" role="manual">Example of linear progression</Link> for more information on this computation method.</Paragraph>
      <Paragraph>This assumption of linearity means that the average inventory
		level of a plan period can be computed as the mean of:</Paragraph>
      <List>
         <ListItem>The level at the end of this plan period.</ListItem>
         <ListItem>The level at the beginning of this plan period, which is equal
		  to the level at the end of the previous plan period.</ListItem>
      </List>
      <Paragraph>The average projected inventory of a plan item is computed as
		the weighted average of the average inventory levels found for the various plan
		periods. This average is a weighted average in that it takes the length of each
		plan period into account.</Paragraph>
      <Paragraph>Refer to online manual topic <Link href="/baanerp/cp/onlinemanual/000343" role="manual">Example of a weighted average of the inventory level</Link> for more information on this
		calculation method.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Average projected inventory value</SectionTitle>
      <Paragraph>Once the average
		projected inventory quantity of a plan item has been determined, the average
		inventory value is computed as follows:</Paragraph>
      <Formula space-and-orientation="indented-estimated">
         <Paragraph>Average projected inventory x material cost</Paragraph>
      </Formula>
      <Paragraph>See the <GUIRef href="/baanerp/ti/cpr/ticpr0107m000#ticpr007.emtc" role="manual">Material Costs</GUIRef> field in the <GUIRef href="/baanerp/ti/cpr/ticpr0107m000" role="session">Items - Costing (ticpr0107m000)</GUIRef> session.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Average negative projected inventory</SectionTitle>
      <Paragraph>The computation of the
		average negative projected inventory is based on principles similar to those of
		the average projected inventory computation (see above). An important
		difference, however, is that for the computation of average negative inventory, ERP Enterprise only considers those
		stretches of time during which the projected inventory is negative.</Paragraph>
      <Paragraph>First of all, an assessment must be made of when exactly the
		projected inventory is negative. For this purpose, ERP Enterprise again assumes that the
		changes in projected inventory from one period to the next proceed in a linear
		fashion. ERP Enterprise uses this
		assumption to pinpoint the moment when the projected inventory turns from
		positive to negative, or from negative to positive.</Paragraph>
      <Note>
         <SectionTitle>Note</SectionTitle>
         <Paragraph>The turning point
		  involved does not have to coincide with a boundary between days. For instance,
		  if a certain plan period consists of five days, the turning point from positive
		  to negative can be assessed at 2.39 days after the start of the plan period. In
		  the same instance, the change back to positive could occur 4.27 days later
		  (that is, 1.66 days after the start of the next plan period). In this case, the
		  number of negative inventory days in these plan two periods would be 4.27 (2.61
		  days in the first plan period and 1.66 days in the second plan period).</Paragraph>
      </Note>
      <Paragraph>Once the exact periods of negative inventory have been
		determined, the average negative projected inventory is computed in a way that
		is similar to the overall average inventory computation. In other words, a
		weighted average is computed that takes the length of the various periods with
		negative inventory into account.</Paragraph>
      <Paragraph>For more information about the corresponding calculation method,
		refer to online manual topic <Link href="/baanerp/cp/onlinemanual/000344" role="manual">Example of a weighted average of a negative inventory level</Link>.</Paragraph>
   </GeneralSection>
   <RelatedTopics ID="/baanerp/cp/onlinemanual/000342">
      <SectionTitle>Related topics</SectionTitle>
      <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>
      <RelTopic>
         <Link href="/baanerp/cp/onlinemanual/000344" role="manual">Example of a weighted average of a negative inventory level</Link>
      </RelTopic>
   </RelatedTopics>
</ManualTopic>