Min / Max Strategy: Days Reserves
This manual describes in detail and with various examples the Min / Max strategy called Days Reserves for optimized planograms. This is the most common use of optimized planograms, where the basic criterion set are the daily reserves, according to which the stock of products for the planogram is calculated.
Criteria
This manual describes how to optimize the planogram in case criteria are set to:
- Prioritization Strategy: By Sales
- Min / Max Strategy: Days Reserves
- Daily Reserve Parent Value Source: Template
Then, to make the optimization based on days reserves work the way you want, set these criteria according to your preferences.
- Sales Type Used for Product Priority
- Normalize by Product Width
- Min Days Reserve
- Max Days Reserve
Replenishment Criteria Setting
For a detailed description of all replenishment criteria, please refer to the Setting of Replenishment Criteria manual.
Min and Max Days Reserve
Min Days Reserve specifies the minimum number of days for which the product supply in the store must be sufficient.
Max Days Reserve specifies the maximum number of days that stores can hold stocks of products. Therefore, the product stock must not be higher than the number of days sold on average for the number of days set in the Max Days Reserve.
The average daily sales of the product is 5 pcs. The Min Days Reserve is set to 10 and the Max Days Reserve is set to 30. What will be the Minimum and Maximum of this product for placement in the planogram?
Average daily sales | Min Days Reserve | Max Days Reserve | Min Value | Max Value |
| 5 pieces | 10 days | 30 days | 10*5=50 pieces | 30*5=150 pieces |
The table shows the calculated values of the Minimum and Maximum. The product must have a stock of at least 50 pieces in the store so that its stock is enough for 10 days and its maximum stock will be 150 pieces (stock for 30 days). Quant will place a minimum of 50 units of this product in the planogram and a maximum of 150 units.
What are the benefits of setting minimum and maximum values over days reserves?
- Planograms can count with the most current sales data (eg for the last month).
- The calculated values are variable and can thus respond to changes in sales.
- This setting allows you to react flexibly to an increase or decrease in sales (if, for example, there is a sudden increase in sales, the value of Minimum and Maximum will automatically increase without the need to change the value settings).
- The setting of Min and Max Days Reserves can also be used in situations where, for example, you order from the supplier only once a week, and you want to make sure that there will be no outage. Setting the Min Days Reserve to 7 days will ensure that your supply never drops below a level that would not be enough for 7 days.
- You can consider product expiration. For example, if you know that a product has a shelf life of 10 days, then you set the Max Days Reserve to a maximum of 10 days. This ensures that the planogram contains only enough products to avoid expiration in the store.
Examples of Replenishment Criteria Settings
The following three examples will explain 3 different situations of setting the replenishment criteria.
Daily sales are rounded in Quant - in our example the daily sales for the product is 0.0466 pcs, but Quant shows a rounded value of 0.05. For more accurate results, we will calculate with the unrounded value.
Situation 1: Not placed product
- Basic data: daily product movement = 0.0466, Min Days Reserve = 6, Max Days Reserve = 15.
- Calculation: 0.0466 x 15 = 0.70 → 0.70 < 1
- Conclusion: the max days reserve is too low, therefore the product will not be placed in the planogram.
If you hover the mouse over the product, a tooltip will be displayed stating the reason why the product was not placed. In this case, it is low sales.
Unplaced product due to low sales
You can track all unplaced products of the selected planogram in the Not Placed Products tab. The table lists all the products that are placed in the planogram template, but Quant did not place them in the planogram for some reason. You can find the reason why the product was not placed in the Not Placed Reasons column.
Quant may only remove products with optional priority level from the planogram due to low sales.
Priority levels are described in more detail in the Setting of Priority Levels manual.
Situation 2: Placed product
- Basic data: daily product movement = 0.0466, Min Days Reserve = 6, Max Days Reserve = 100.
- Calculation: 0.0466 x 100 = 4.66 → 4.66 > 1
- Conclusion: the Max Days Reserve is sufficient, therefore the product will be placed in the planogram.
In the Replenishment tab you can check all relevant replenishment data about the placed product.
- The Planned Basic Units column shows the number of BUs that actually occur in all planograms in that store. In our case, this product is located on only one planogram, so all BU count data is for that planogram.
- In the Daily Movement column, the average daily sales of the product is calculated (0.0466).
- The Min column is the calculated minimum number of products that should be placed (6 × 0.0466 = 0.28).
- In the Max column, the maximum number of products that should be placed is calculated (100 × 0.0466 = 4.66).
- In the Days Stock Maximum column, you will find an information for how many days in maximum the stock of the product that is actually placed in the planogram can last. In our example, 4 BUs were placed, which is a stock that lasts for 85.88 days (4/0.0466).
According to the values calculated in the Min and Max columns, an interval (0.28; 4.66) is created. Quant recommends placing the number of products that falls within this interval. In this case, 4 pieces were placed.
Quant recommends to place the number of BUs according to the calculated interval, but the number of actual placed BUs must always respect the user setting of the number of BUs on the block (number of pcs. in width, height and depth in the Component tab).
You can read more about setting the number of BUs for products in the manual Setting and respecting of the number of BUs in width.
Products in the Replenishment tab are highlighted in blue (understock) or red (overstock) in the Color column, or not highlighted (optimal) as in the case of the example product:
Overstock
Products are marked in red in the Replenishment tab if Quant recommends placing fewer pieces than are placed in existing planograms. According to the figure, an example of this would be a product with Id 502336 whose number of BUs should fall in the interval (0.12; 1.92), but there are 3 BUs placed in the planograms. Quant recommends placing only 1 BU depending on the sales of this product. For this product, the Overstock box is also checked.
Understock
Products are marked in blue in the Replenishment tab if Quant recommends placing more pieces than are placed in existing planograms. In such a situation, there is a product with Id S0173, whose number of placed BUs should be in the interval (3.57; 59.45), but only 1 BU is placed in the planograms. Quant recommends increasing this amount to a minimum of 4 BUs and a maximum of 59 BUs. The product has the Understock box checked.
You can also see the color highlighting of "Overstock" and "Understock" directly in the planogram by turning on the replenishment highlighting in the Highlight tab.
Situation 3: Comparison of planograms in London and Brighton
We share the same planogram template for London and Brighton stores. The following replenishment criteria are set on this template:
- Min Days Reserve = 6
- Max Days Reserve = 100
Brighton
- Basic data: Average daily product movement in Brighton store = 0.0055
- Calculation: Min = 6 * 0.0055 = 0.033, Max = 100 * 0.0055 = 0.55
- Max Days Reserve is too low (0.55 < 1).
London
- Average daily product movement in the London store = 0.1178
- Calculation: Min = 6 * 0.1178 = 0.71, Max = 100 * 0.1178 = 11.78
- The Max Days Reserve is sufficient for placement of the product (11.78 > 1).
Conclusion: The same product will be placed in the planogram in the London store, but not in the Brighton store.
The situation in the Brighton store is identical to Situation 1 explained above, where the product is not placed in the planogram due to low sales. Other stores, however, have different sales and it may happen that the product is placed in one store and not in the other.
In the London store, you can see that with the same replenishment criteria set, the product was placed because the number of units sold there was higher than in the Brighton store over the period under review.