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Safety Stock automatic calculation

ramusume
Discoverer
0 Kudos

Good morning,

can someone help me understand how the system calculates the safety stock?

I found the formula which should be this

SS = R x SQRT(W) x MAD

where W = (Lead time /Forecast period)

and I have set the following parameters in the material master:

Service level: 80 % which means R Factor 1.05;

Period Indicator: T 'Daily

Forecast Model: D --> Constant model

Plan. Delivery Time: 45 days

History periods: 60 days

Forecast periods: 30 days

MAD = 5

why is the safety stock result is 31? (see screen). can anyone help me understand?

Accepted Solutions (0)

Answers (2)

Answers (2)

ramusume
Discoverer
0 Kudos

Hi Shaikh,

Thank you for your reply. I also tried your formula and I thought I succeeded, but with other examples I don't get it:

1) first example changing MAD =13.

if i apply the formula:

SS = 1.05*(45*5/7)*13

W= (45*5/7) + 0 +0

W= 32.1428 ≈ 33

Square root of W = 5.74

SS =1.05*5.74*13 = 78.351

but in the screen shot SS = 81

what do you think is the reason?

_________________________________________________________________________

) second example with planned delivery time 3 days.

W= 3*5/7 = 2,143

square root W = 1.47

SS = 1.05*1.47*13 = 20.0655

but in the screenshot it is SS=24.

can you help me to understand? thanks

Rocco

hitman45
Explorer
0 Kudos

Please check Purchase Processing time.

hitman45
Explorer
0 Kudos

SS = R x Square root of W x MAD

Where,

· MAD = 5

· R (Service level Factor) = 1.05

· W = (PLDT *5/7) + GRT+PRT

PLDT= Planned del. Time= 45 days

GRT= GR proc. Time= 0 (I am consider is as 0 days)

PRT= Purchase Processing time (PRT) = 0 (I am consider is as 0 days)

Why: 5/7, because we have considered 5 working days in a week.

Therefore,

W= (45*5/7) + 0 +0

= 32.1428 ≈ 33

Square root of W = 5.74

SS = R x Square root of W x MAD

SS = 1.05 x 5.74 x 5

SS = 30.158 31