What Is a Projected Available Balance?
A projected available balance (often shortened to PAB) is a running stock figure calculated forward in time. You start from the stock you can actually use today, then walk through every future movement in date order: receipts from purchase orders, returns from jobworkers and output from production add to it; sales orders, material for work orders and other issues take away from it. After each event you write down the new balance.
The result reads like a bank statement for one item. Instead of a single number that is true only right now, you get a line for every day something happens, and the first line where the balance falls below zero is the date of your shortage.
Why a Single 'Available Stock' Number Fails
Most stock screens answer one question: how much is on the shelf? That is useful for picking an order today and almost useless for deciding what to buy, because buying is about the future.
- It has no dates. 100 kg on hand looks healthy even when 140 kg is already promised over the next ten days.
- It ignores what is coming. A purchase order raised yesterday, or material out at a jobworker, is invisible, so the same requirement gets ordered again.
- It counts stock you cannot use. Quarantined lots, expired lots and stock sitting in scrap or WIP stores are inside the warehouse total but cannot be issued.
- It hides the cause. Even when you notice a shortage, you cannot see which order created it or which open order could cover it.
A Worked Example
Take a steel sheet item. Usable stock today is 100 kg. A sales order needs 80 kg on 15 September, a work order needs 60 kg on 20 September, and a purchase order for 300 kg is due on 25 September. (Illustrative example.)
Walking forward: 100 opening, 20 after the sales order, minus 40 after the work order on 20 September, and 260 after the purchase order arrives. The stock report would have said 100 all along. The projection shows a 40 kg hole for five days, and it also shows the answer: the 300 kg purchase order already exists, it is simply arriving five days late. Bringing it forward fixes the shortage without buying anything new.
Five Rules That Keep the Projection Honest
A projection is only as good as its inputs and its ordering. These rules separate a trustworthy balance from a misleading one.
- Start from usable stock only. Exclude scrap and WIP stores, quarantined lots and lots past their expiry date. Subtract stock that is held with no document behind it.
- Do not subtract reservations twice. If a work order has reserved material, either count the reservation or count the work order's demand, never both.
- Put receipts before issues on the same day. If 50 kg arrives and 70 kg is issued on one day, the day ends at a small positive balance. Processing the issue first shows a false shortage that never happens on the floor.
- Move late items to today. An order due last week is not history; it is late and still outstanding. Place it on today's date and flag it, rather than running the balance through dates that have passed.
- Keep safety stock separate. Show safety stock as its own column (net available) rather than reducing the balance, so the physical position and the policy position stay distinct.
What to Include on Each Side
Supply and demand should come from documents your team already creates, not a separate planning spreadsheet.
- Supply: open purchase order lines by their delivery date, material due back from jobworkers on the expected return date, finished goods due from work orders, and the unordered balance of approved indents.
- Demand: sales order lines less what has already been dispatched, and material required by work orders from their start date.
- Convert everything to stock units. A purchase order in drums and a sales order in boxes must both be converted before they are added or subtracted, or the projection is wrong by the conversion factor.
Fix Shortages With the Cheapest Action First
Once you can see a shortage, the instinct is to raise a purchase order. That is usually the most expensive option. Work through the cheaper ones first:
- Transfer. Another warehouse may hold stock it will not need for the whole planning horizon.
- Expedite. An order already past due is material you have paid for; chase it.
- Pull forward. A confirmed order arriving after the shortage can often be brought in.
- Buy or make only the remaining gap, rounded up to the supplier's minimum order quantity, with an order-by date worked back from the lead time.
The Other Direction: Excess and Early Orders
A projection also exposes cash committed too early. An order nothing in the next quarter needs can be cancelled. An order arriving weeks before its first use can be deferred. An order larger than the real requirement can be reduced. These rarely show up on a reorder screen, and they are often worth more than the shortages.
How ERPDrive's Planning Workbench Does This
ERPDrive's Planning Workbench builds this projection for every item automatically from live documents, following the rules above. It opens with an exceptions list of only the items that go negative, fall below safety stock, or have late or undated documents, worst first.
For each item it recommends the cheapest fix in the order described here, and accepting a buy or make recommendation raises a draft purchase or work order that still goes through your normal approval. The Reorder Alerts screen uses the same logic, so stock already on order and material at jobworkers are counted and nothing is suggested twice.
Frequently Asked Questions
What is projected available balance in inventory?
It is a running stock balance calculated forward in time: usable stock today, plus dated receipts, minus dated issues, recorded after each event so you can see the date stock runs short.
How is projected available balance different from available stock?
Available stock is a single figure for right now. A projected available balance shows how that figure changes on every future date as orders arrive and are fulfilled.
Should safety stock be subtracted from the projected balance?
It is clearer to keep it separate. Show the physical projected balance, and a second net available column that subtracts safety stock, so you can tell a true stockout from a breach of your buffer policy.
How often should a projected balance be recalculated?
Whenever the documents behind it change. In a connected ERP it can be recalculated every time the screen is opened, so it always reflects the latest orders and receipts.