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Service variability safety stock - Formula

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Can anyone please help in understanding how the service variability safety stock is calculated. I have seen a few blogs such as the one below but unfortunately it falls short of explaining the key figure. Any help will be greatly appreciated.



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Hi Ahmed,

Thank you for reaching out with your inquiry.

The multi-stage optimization generates optimal internal service levels as decision variables to allocate safety stock across each component sourcing and transportation sourcing relationships in a multi-stage network, e.g., output key figures: INTERNALLOCTOPRDAIF@WKPRODLOCCOMPSRC and INTERNALAVAILABLEINFULL@WKPRODLOCLOCFR.

These optimal internal service levels are mean values and have an implicit deviation gamma curve around it. As a result, the variability of such service level needs to be captured in the mode of safety stock downstream, hence, the Service Variability Safety Stock output key figure.


Alexis Lozada