Common use of Priority Assignment Clause in Contracts

Priority Assignment. Every SKU has a priority level in case one or more parts are available in the ’stock of defective parts’ or are somewhere in the repair shop. This priority level is adapted daily to the current situation. There are eight different priority levels, which are referred to as Prio 1, Prio 2, Prio 3, Prio 4, Prio 5, Prio 99, Prio 100 and Prio 300. The first six priorities are dependent of the inventory level of the SKU. The inventory level is equal to the on hand stock of a SKU minus the number of backorders of that SKU. The latter two priorities are special cases and will be explained in the next subsection. The definition of the first six priority levels is given below: Prio 1: Assigned to a SKU which is needed immediately because a train is down and there are no spare parts available anywhere in the network; Prio 2: Assigned to a SKU when the inventory level in the network is below the minimum level (policy safety stock) and greater than zero. Prio 3: Assigned to a SKU when the inventory level in the network is equal or above the minimum level and below the minimum level plus the total requirements of the current month; Prio 4: Assigned to a SKU when the inventory level in the network is equal or above the minimum level plus the total requirements of the current month and below the minimum level plus the total requirements of the current and the next month; Prio 5: Assigned to a SKU when the inventory level in the network is equal or above the minimum level plus the total requirements of the current and the next month and below the minimum level plus the total requirements of the current and the next two months;