Hi experts,
I've been testing the optimization horizon setting in the Inventory Profile. According to the SAP Help then the Optimization Horizon is: "... the time period (in weeks) from which forecast inputs are used in your inventory optimization plans".
Based on that I was expecting some sort of fixed safety stock, or repetition of the recommended safety stock outside of the optimization horizon (while within the planning horizon). But when I change the Optimization Horizon, then I'm getting vastly different results, also on the very short term (week 1 and forward).
I understand that if I set the optimization horizon to less than the flow-through lead time, then no demand/std dev will be propagated through the network.
But for a product with 4 weeks of flow-through lead time, I experience different results on recommended safety stock if I choose 52 or 104 weeks Optimization Horizon (Planning Horizon = 104) - the result differs with about 20%.
Can anyone explain how I should interpret the Optimization Horizon, and how come it has such a big impact on even short term recommendation?
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