PE2’s are the opposite of PE1’s. These are items whose demand is much lower than the average in the previous period. Like PE1’s demand spikes, these dips in demand will occur from time to time. It is essential to understand that this is likely a rare occurrence and no change will be needed.
PE1’s are products whose demand is much higher than the average in the previous period. These spikes in demand will occur from time to time. It is essential to understand that this is likely a rare occurrence and you will rarely need to make a change. Changing the average every time there is a spike will throw off your inventory levels because the product’s demand will most likely return to normal. If you know the product will have increased demand in the future because of a new customer you can then adjust the average using the edit history function.
An important component of the suggested order is the vendor Lead Time. If you don’t know how long it takes you on average to receive your products from your vendors, how can you possibly order the correct amount? It is imperative to account for the time it takes to receive the order.