Operations planning calculates global target inventory levels to support an item’s sales forecasts. In turn, it calculates production requirements based on target inventory levels.

If you do not specify otherwise, the system automatically sets each week’s target inventory level to zero. When set this way, you cannot build up inventory for future demands. You also cannot anticipate inventory shortages or surpluses.

To establish target inventory levels, define global weeks-of-coverage factors for minimum, average, and maximum target inventory levels. This method requires more implementation effort. However, it does support inventory buildup for upcoming sales forecasts.

Weeks of Coverage on Operations Plan illustrates how the system uses coverage factors on the family plan. In the example, the system uses an average cover factor of 2.0 to calculate the target inventory level.

When you change production due quantities on the plan, it uses the minimum (–) and maximum (+) factors to alert you to potential inventory shortages and surpluses relative to the average coverage level. This is illustrated in Weeks of Coverage on Operations Plan—Production Due Quantities Changed, which assumes a minimum coverage of 1.0 and a maximum of 3.0.