September 2019 - 40

MANAGEMENT
7,000
6,000
5,000
4,000
3,000
2,000
1,000
Sales +
service level
3. Plan for any upcoming promotions or growth.
Just like you planned for promotions last year,
identify in your plan what promotions you will be
having in the upcoming year that will be unique
from past years. Also, document any plans for
growth or new products.
Sales +
GROWTH
2/2
3/2
4/2
5/2
Figure 2. Sales with planned growth or promotions.
Production
Growing
ROP By Item
In Greenhouse
6/2
7/2
4. Determine the lead time to supply to your
customer. If your customer is a retailer or
wholesaler your lead time could be just the time
to pull and ship the product. If you think further
upstream and you want to know when to plant
product and have it available for shipping the
customer is your shipping department and the
lead time is the products grow time. Using this
simple example most growers have at least two
lead times:
* The lead time to pull and ship your product
to your customer
* The lead time to grow your product and
have it available for shipping
A
ROP by Store based
On Sell through
ROP
A
ROP
C
ROP
B
ROP
5. Decide the service levels you must have to meet
your customers' requests. Service level can be
defined as " how confident you are that material
will be available to service a customer's order. "
In other words, if you set your service level
for 98%, you would plan to have the product
available for the customer 98% of the time.
Service level is the throttle that drives customer
satisfaction and for key products additional
inventory you want to carry to satisfy your
customers. Service level can also be referred to
as sell-through.
Figure 3. Replenishment based on consumption.
RELIABLE
VENTILATION EQUIPMENT
Family-Owned
Since 1937
propagation trays
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Quietaire's Angle Flow:
Aluminum or Galvanized.
Designed to maximize
efficiency.
Quietaire's Stainless Steel Evaporative
Cooling System:
No sump required.
Replacement
cooling pads
also available.
Quietaire's HAF18: Affordable option
to move air through your greenhouse.
Serving the greenhouse
industry for over 75
years with prompt
service and durable,
low maintenance and
quality ventilation products.
6. To determine how much inventory you need,
use the historical data. The basics are to take
your historical daily sales, add or subtract any
known events, sum the daily usage based on
the lead time to supply to your customer, and
add a service level factor to meet your customer
requirements for the key products.
Because of the seasonality in this industry,
inventory levels will change throughout the
season. We will calculate the amount of
inventory required on a rolling basis to allow you
to plan through the season what products are
required. The inventory value that is calculated
is the target level that we strive to achieve. This
inventory level is what we call a Re-Order Point
(ROP). The ROP includes the amount of inventory
that covers the time to replenish material based
on the lead time and your service level. A simple
example would be if your lead time to pull and
ship product to a retailer is two days and the
amount of material consumed per day at your
98% service level was 200 units, we would take
two days x 200 units and your ROP is 400 units.
www.quietaire.com
info@quietaire.com
866-228-9421 Fax 713-228-9425
505 North Hutcheson Houston, TX 77003
40 SEPTEMBER 2019 GPNMAG.COM
7. After the ROP is calculated, you will replenish
the product to the retailer based on what was
sold. If your ROP is 400 units and when you see
the customer only has 200 units in stock, that
is your signal to ship them 200 more units. We
Quick Lead Time!
http://www.quietaire.com http://www.GPNMAG.COM
September 2019

Table of Contents for the Digital Edition of September 2019
