Lead Time: is how long it takes (in days) for an item to become saleable from the time you place the purchase order. This includes all assembly, manufacturing, and shipping.
Order Interval: is the amount of time (in days) between purchase orders.
Sales Horizon: is the total amount of time (in days) of your lead time + order interval.
Why Sales Horizon is important: this is the time frame used in calculating your recommended purchase quantities. ForecastRx uses your set sales horizon as the amount of days inventory you want in stock and on order to minimize stockouts.
*Note: If you are not using ForecastRx to create purchase orders from suppliers, you do not need to enter this information.
For example: If your lead time is 75 days and order interval is 30 days, your sales horizon is 105 days. ForecastRx will show your projected sales for 105 days and give you a recommended purchase quantity for this time frame also.
Does this mean the sales horizon is the amount of inventory I will have on hand in my warehouse? No, you will have the sales horizon days of inventory or less, spread between your warehouse and on order. If your product is out of stock, we will recommend you place an order with enough inventory to cover your sales horizon and then future orders will be lower.
Below is an example of a product with a sales horizon of 180 days. A lead time of 90 days and order interval of 90 days:
In this example, we start with a product that is out of stock, so 180 days worth of inventory is ordered and arrives at warehouse on January 1st. By April 1st (90 days later), 90 days of inventory has been sold and 90 days is left in warehouse. ForecastRx will recommend you order 90 more days of inventory to maintain the 180 day sales horizon. By July 1st (90 days later), 90 more days of inventory has been sold and your initial 180 days of inventory from January has been depleted to 0. At the same time, your April purchase order of 90 days worth of inventory has also arrived, bringing the current inventory to 90 days once again. On this date, ForecastRx will recommend you order 90 days worth of inventory to maintain the 180 day total, and this ordering cycle will continue.