This setting is designed to make it easier to reorder products that are not urgent but still could be ordered, when placing an order from a supplier that carries this item.
For example, for a products that sells 1 pc / day, you wish to cover demand for 90 days. This product has remaining inventory of 100 pcs and has a lead time of 30 days:
With this setting disabled, you would be suggested to order 90 pcs regardless of how many units you have in stock.
With this setting enabled, however, we take into account the amount of remaining stock there will be when the ordered goods have arrived (based on lead time). This way for the same product you would be suggested to order 20 pcs since there would still be 70 pcs in stock when the ordered goods are delivered to warehouse.
Lead time
What is lead time and how it affects forecasting?
Days of stock
What is days of stock and how it affects forecasting?
