ABM Inventory can make orders according to both scenarios: either direct deliveries, or the distribution centre (DC) deliveries (distribution centre = central warehouse). If the supply chain looks the following way: External supplier - Distribution Centre - Stores, it is the DC that will act as a supplier for the Stores (therefore it is important to save the synchronization between the Stores and the DC).
For the DC inventory, it is the External Supplier who acts as a main supplier. So, the orders from the stores are being formed at the DC (using DBM, CDA or FRESH algorithms, which consider the current demand for SKUs).
For the inventory at the DC order mechanism differs - here we use DFO. DFO algorithm means that the orders to the external supplier from the DC will be formed according to the current demand level across the stores and considering the current levels of stock across the stores.
The calculation has several stages: