Understanding the Business Central Reordering Policy

The business central reordering policy plays a critical role in how inventory is managed.

Ask a planner how much they trust the planning worksheet and you learn a lot about an implementation. Where the answer is “we mostly ignore it,” the cause is rarely the planning engine. It is the item setup feeding it. Business Central does exactly what the reordering policy tells it to do, and when that was set at go-live and never revisited, the suggestions look wrong, so people stop looking.

Key points in this article:

• A blank reordering policy leaves the item out of the planning run entirely.
• Two of the four policies are driven by a reorder point, and two by actual demand.
• Microsoft suggests roughly 80 percent of items suit Lot-for-Lot.
• Reservations break reorder-point planning, so set Reserve to Never on those items.
• Stockkeeping units are the only reliable way to plan the same item differently by location.

What is a reordering policy in Business Central?

A reordering policy is the field on the item card, or on the stockkeeping unit card, that tells the planning engine how to replenish an item. It is also the switch that decides whether the item is planned at all. Leave it blank and Business Central leaves that item out of the planning run entirely, so someone has to replenish it manually, through the Order Planning page or from memory.

Four policies are available, and they divide into two groups: two driven by a reorder point, and two driven by actual demand.

How do you choose the right policy?

Microsoft’s guidance maps the policies onto an ABC classification, and it holds up well in the field. A items, the high-value ones you control tightly and often buy or make to order, belong on Order. The broad middle belongs on Lot-for-Lot, and Microsoft suggests roughly 80 percent of items can use it. Low-value C items belong on Fixed Reorder Qty., moving to Maximum Qty. when carrying cost or physical space caps how much you can sensibly hold.

Do that classification before you touch a single item card. Sorting your item master by annual usage value gives you a defensible starting point rather than one policy applied uniformly because it was the default.

Five best practices that prevent bad suggestions

Set Reserve to Never on reorder-point items. Reserved quantities still count toward projected inventory, so the reorder point looks satisfied while the stock is committed to someone else. The system then compensates with exception orders, which is where planners lose confidence fastest.

Leave Time Bucket blank. Blank means the reorder point is evaluated daily. A one-week bucket means inventory can sit below the reorder point for a week before anything is suggested. Microsoft also advises against combining a time bucket with the Maximum Qty. policy, because the bucket is frequently overruled.

Base the reorder point on demand during lead time. If an item averages 100 units of demand over a seven-day lead time, the reorder point cannot be less than 100. And if you leave the reorder point empty, safety stock quantity takes over that role, which is almost never what anyone intended.

Keep forecasts off reorder-point items. Anticipated demand is already expressed in the reorder point, so adding a forecast double counts it. If an item genuinely needs to be planned from forecast, move it to Lot-for-Lot.

Use stockkeeping units when you plan by location. Microsoft is direct about this: stockkeeping units are the only way to get stable planning results for demand at specific locations. Parameters on the SKU card take priority over the item card, so this is also how you give the same item a different policy in your main warehouse than in a branch.

Why doesn’t the planning worksheet suggest an order?

Usually because supply is already on the way. Business Central will not suggest new supply if existing supply brings projected inventory back to the reorder point within the item’s lead time. Check open purchase and transfer orders before assuming the plan is broken.

The opposite question, why a suggestion is larger than the demand behind it, is answered on the Untracked Planning Elements page. It names the parameter responsible: safety stock, a minimum order quantity, rounding to an order multiple, or a dampener.

Also worth knowing: supply created to meet a reorder point is excluded from later supply balancing. If demand drops or you phase an item out, those orders will not shrink on their own. Review them manually, or move the item to Lot-for-Lot, which will reduce or cancel the excess. Left alone, they become excess inventory nobody ordered on purpose.

What changed in 2026 release wave 1

Business Central added two fields to the location card. Missing SKU Planning Policy controls what happens when an item has no stockkeeping unit at a location:

• Minimal keeps the earlier behavior, which reset order modifiers to zero.
• Item Card plans from the item’s own parameters instead.
• Don’t Plan skips the item at that location.

SKU Creation Policy governs whether stockkeeping units can be created there at all. If you run several locations without a full set of stockkeeping units, this is worth a look.

Where native planning runs out of road

Business Central’s planning engine executes rules well. It is not a forecasting system. The Demand Forecast page is manual entry — you type the numbers. The free Sales and Inventory Forecast extension does apply Azure AI to your item ledger history, but it forecasts across all locations and variants combined, so you distribute the result by hand, and it writes nothing back to safety stock or reorder points. Those stay static fields someone has to maintain.

The missing layer sits above the policy: safety stock driven by a target service level, allowance for supplier lead time variability, seasonality, and re-segmentation as demand shifts. If you maintain reorder points in a spreadsheet, that is the gap you are filling by hand.

Two solutions we implement close that gap, at different scales.

Enhanced Forecasting Worksheet from DMSi Works applies Azure AI to your sales history and lets you tune the forecast by timeframe and confidence level. It filters by item, category, and location, which removes the aggregation problem in the native extension, and it carries parameters for reorder point, safety stock, and maximum inventory. It is free for a single named user on Business Central online, which makes it a low-risk place to start.

Lanham Demand Planning from Lanham Associates is a full demand planning system built for buyers and planners. It runs eighteen forecasting formulas with machine learning across up to fifty-two periods, handles seasonal and long-lead-time items, and adjusts safety stock for seasonal variation. It also does two things native Business Central cannot: it compares suggested orders against vendor targets by dollar value, weight, and volume, and it classifies inventory daily as good, surplus, or excess. Suggestions stay suggestions — the buyer decides what to release.

Frequently asked questions

Which reordering policy should most items use? Lot-for-Lot suits the majority of items in most companies, because it plans from actual demand and adjusts as that demand changes.

What happens if the reordering policy is blank? The item is excluded from the planning run, so no suggestions are generated and it has to be replenished manually.

Can reordering policies differ by location? Yes. Create a stockkeeping unit for each item and location combination and set the policy there. The SKU card overrides the item card.

How often should we review these settings? At least annually, and whenever supplier lead times, demand patterns, or your location structure change materially.

Has iCepts worked with advanced forecasting solution partners? Yes. iCepts Technology Group has an extensive history with both DMSi Works and Lanham Associates, and implements the forecasting solutions described above.

Next Steps

iCepts Technology Group has served distributors and manufacturers across the Mid-Atlantic since 1980, and implements and supports Microsoft Dynamics 365 Business Central. If your planning suggestions are being ignored, we can help you find out why and put the right policies in place.

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Contact iCepts Technology Group, Inc., a Microsoft Business Central Partner in Pennsylvania.