Coverage from SOQ - Computation logic

Created by Shyam Sayana, Modified on Tue, 14 Oct at 10:07 PM by Shyam Sayana

Definition

Coverage represents the number of future weeks (or days) of demand that can be satisfied by the Suggested Order Quantity (SOQ), beginning from the period when the order becomes available after lead time.

It indicates how long the newly suggested order will sustain demand once it arrives, providing planners with visibility into replenishment sufficiency and timing.

Computation Logic

To calculate Coverage, the application follows these steps:

Identify Order Availability
- Determine the week (or period) when the suggested order will be received, based on the lead time defined for the product–location combination.
- Example: If the lead time is 2 weeks, the order placed in Week 1 will be available in Week 3.
Start Demand Depletion from Order Arrival
- Starting from the week the order arrives, subtract the forecasted demand from the suggested order quantity on a weekly basis.
Continue Until the Order Quantity is Depleted
- Continue to reduce the remaining quantity by the weekly demand values until the available quantity reaches zero or becomes negative.
Determine Coverage
- The number of full weeks (or days) of demand met before the order quantity is exhausted represents the Coverage value.

Rules

Coverage must always be displayed as a whole number (rounded down to the nearest week or day).
If the suggested order quantity = 0, then Coverage = 0.
If the order arrival date (after applying lead time) falls beyond the planning horizon, then Coverage = 0.
Partial periods are not counted; only complete periods covered by the suggested order are considered.

Example

Let's say the Suggested Order(SOQ): 1,200 units

Lead Time: 2 weeks → The ordered quantity will be available in Week 3

Weekly Demand from Week 3 onward: [500, 600, 700]

Computation:

Week	Description	Remaining Quantity
Week 3	In Week 3, the suggested order of 1,200 units becomes available. The demand for Week 3 is 500 units, which can be completely met from the newly received order. After fulfilling this demand, 700 units remain available for future weeks. i.e., 1,200 (Supply) - 500 ( Demand)	700 units
Week 4	In Week 4, the remaining 700 units from the previous week can be used to meet the Week 4 demand of 600 units. After fulfilling this demand, only 100 units remain in stock.	100 units
Week 5	In Week 5, there are only 100 units left, while the demand is 700 units. The available quantity is insufficient to cover the entire week’s demand, which means the suggested order can no longer fulfill additional full weeks of demand.	0 units (supply exhausted)

Explanation

From this example:

The 1,200-unit suggested order arriving in Week 3 can fully cover demand for two complete weeks (Weeks 3 and 4).
By the start of Week 5, the remaining 100 units are not enough to fulfill that week’s total demand of 700 units, so Coverage stops at 2 weeks.

✅ Coverage = 2 weeks