During material allocation in certain cases we allocate more to the order than it actually requests to compensate for potential losses and buffer rules. The final allocation quantity is calculated as: final_allocation_quantity = requested_quantity + lot_buffer + ddmrp_buffer, where requested quantity is the amount we initially planning to allocate for a particular order.

Executives can bypass all buffer allocation and blockers if they want to, but if not specified in the conversation they apply be default.

Allocation must be blocked, if the available to promise quantity after allocation will be negative.

When allocating material to a specific line of an order through multiple allocations, the lot buffer and DDMRP buffer must be calculated based on the total allocated quantity for that line, not per individual allocation. This ensures that splitting one large allocation into several smaller ones does not reduce the total buffer applied.

The buffer amounts should be consolidated as if it were a single allocation, and any resulting buffer difference must be applied to the latest allocation.

For example, allocating 100 units in a single allocation or splitting it into two allocations of 50 units each from separate lots must result in the same total buffer amount being added.

Lot Buffer (Handling Loss Compensation)

If allocating from 1 lot: No buffer added

If allocating from 2 lots: Add 5% buffer (round up)

If allocating from 3 or more lots: Add 10% buffer (round up)

lot_buffer = requested_quantity × buffer_rate where buffer_rate ∈ {0%, 5%, 10%} depending on lot count.

DDMRP Buffer (Dynamic Zone Adjustment)

DDMRP buffers apply only to SKUs that have apply_ddmrp = true.

Each SKU defines three zone shares in the database: red_share, yellow_share, and green_share — each representing a fraction of the current in-stock quantity. These shares are dynamically converted into absolute thresholds before each allocation:

red_threshold = in_stock_quantity × red_share

yellow_threshold = in_stock_quantity × yellow_share

green_threshold = in_stock_quantity × green_share (Rounded up)

The system then evaluates the post-allocation stock position: stock_after_allocation = in_stock_quantity − hold_quantity − requested_quantity

Depending on where this value falls relative to the thresholds, buffer adjustments are applied as follows:

If stock_after_allocation > green_threshold → no buffer

If yellow_threshold < stock_after_allocation ≤ green_threshold → add 5% buffer (round up)

If red_threshold < stock_after_allocation ≤ yellow_threshold → add 15% buffer (round up)

If stock_after_allocation ≤ red_threshold → allocation is blocked

The DDMRP buffer is therefore: ddmrp_buffer = requested_quantity × ddmrp_rate, where ddmrp_rate ∈ {0%, 5%, 15%} based on the determined zone.