How can I calculate a commitment volume by days rate?

Question

I am not sure what the name of the formula I am searching for is. I normally focus on coding sites but since this is a math question I figured this is the best place to ask.

I have a problem where I am trying to identify the sell through rate of inventory items per vendor and then return a rate and percentage for Sales (department) to identify if the vendor is on track or not to meet their quota. I need to show the rate they should be at per day and the percentage they are currently at

To help visualize this, a vendor has committed to 1,000 volume in 30 days:

commitment volume:   1,000
commitment days:     30

15 days into the contract, I check the vendor and see that they have only purchased 200 items.

purchased items:           200
days left of commitment:   15

I know the vendor needs to purchase 33.33 items per day.

33.33 = (1000/30)

I know that at 15 days the sell through rate is 20%.

0.2 = (200/1000)

This is where I am confused. How can I get the curent rate they are at for the days that have passed? How can I get the percentage with the commitment and their purchased items with the 15 days left?

I am thinking I need to multiply the items per day by the amount of days that have passed to get the expected order number, this gives me 500.

500 = (1000/30) * 15

I should then divide the actual amount by the expected to get 40%.

0.4 = (200/500)

I believe 40% is what they are actually fulfilling with their order. So if I -1 I can see they are off 60%.

.6 = 0.4 - 1

Am I correct to assume this is the right formula? Something doesn't feel right about this so I am asking for help.

Like, I said, I am not aware of the name for what I am trying to calculate is. It's basically a tool needed to help Sales reach our to vendors to ensure they meet their quotas. I need to see a the current rate and off by percentage. Please let me know if this is correct or if I completely missed this. Also, what is the correct name for this??

Thanks

Answer 1

Maybe this question suits better at Money Stack Exchange

I think everything is in order in your reasoning. But i am afraid you are lacking of the complete goal of all of this, which is to control the payment to the vendor. Which, let get known, is almost the only way to control a vendor.

• A contract of 1000, during 30 days,
• We assume periodic sales, this is, a daily accomplishment of 33.3 units/day,
• The vendor has an actual accomplishment of 200 units by day 15,
• The vendor has a scheduled accomplishment of 500 units by day 15, this is, the vendor is having only a 40% of the committed sales by the day 15,
• The time advance is 15 days against 30 days, this is, a 50% of completion,
• With this, the actual sales commision by day 15 should be only 50%*40%=20%, instead of the scheduled sales commision of 50%*100%=50%.
• Hence, you ussualy should plot the actual vs the scheduled quantities. When the vendor react to this, they ussually declares a calendar of figures, a curve of values on which they will perform their sales, lets say, at day 20 they will have 500 sales, at day 25 they will have 700 sales, and at day 30 they will achieve 1000 sales. This values are called the forecast quantities.

Descriptions on these quantities may vary, but the concept of control is kept.

By the way, this is not a maths question. See Vendor Control, Project Management, Project Control.

https://www.lynda.com/Project-tutorials/Understanding-baseline-scheduled-actual-values/193706/373725-4.html https://www.projectmanagement.com/discussion-topic/34957/Difference-between-baseline-date---forecast-date

Answer 2

What you can do is get the amount of days in the current month, lets call this $D$. Then $100\times\frac{n}{D}$ is the sell through rate that should be reached at $n$ days if you want to, at the very least, sell all the volume that has been committed. So let us say you have a 30-day month and are trying to figure out what the sell through rate should be at 11 days: $100 \times \frac{11}{30} = 36.36\%$. However, if they have only sold 250 out of 1000 items, then their current sell through rate is $100 \times \frac{250}{1000} = 25\%$. This is bad because they are below the sell through rate they should be at. You basically compare what it should be to what it actually is.

Let's say you now want to figure out what they should start selling at if they want to meet the volume committed. Take the example above, at 11 days into the month there are 19 left and at 250 inventory sold, there is 750 left. So what you have is that they must sell $\frac{750}{19} \approx 40$ per day. At 40 per day, that is $100 \times \frac{40}{1000} = 4\%$ sell through rate for the next 19 days (Note that the previous 11 days they were averaging only $100 \times \frac{250}{1000} = 2.75\%$ sell through rate per day).

So lets recap: $D$ is total days in month and $V$ is total volume committed. Then the sell through rate after $n$ days should be $100 \times \frac{n}{D}$. If you are trying to figure out what the average sell through rate per day should be aftere $n$ days of the month are, then it is $100 \times \frac{(V - \#sold)}{nV}$.

Note: This has been done with respect to linear trends. This means I do not take into account things such as seasonal times that may affect selling rates.

I hope I understood your question fully. If not, please let me know.