Thamizh,
Let me start by providing some definitions and then point you to some documents with more details. Can I ask you if you are just learning about EIS and IBP or if you are configuring and implementing this for a customer?
Merchandising Stock: Driven by MIN_REQUIRED_STOCK. The minimum inventory that needs to be kept (at retail locations or due to contractual obligations for example). Does not impact safety stock. Drives Merchandizing stock. Two examples are cell phones and cars. A cell phone store will not sell the last model of a cell phone so it can have a sample of all the products they offer. Similarly, a car dealership may not want to sell the last model they have of a car so that customers can see the car and test drive it until more inventory is available. These are examples of minimum required stock which is an input into EIS. http://scn.sap.com/docs/DOC-57039
Safety Stock: Safety Stock in EIS is defined as an inventory to buffer against uncertainty. Therefore, the amount of safety stock is dependent on the target service level input into the model and the supply and demand uncertainty calculated. Note that in EIS, the safety stock is intended to be used and not held back from filling orders.
Safety Stock = Z x Sigma x (LT + PBR)
LT + PBR is referred to as the ‘Exposure Period’
Z is the multiplication factor corresponding to service level target
Sigma is forecast error
This simple formula is only valid for single-stage, normal forecast error and non-stockout probability service level metric. EIS runs a supply chain model and mathematical optimization to find the lowest-cost inventory targets that meet customer service levels at all item/locations in your supply chain model.
Unshifted Safety Stock: Unshifted Safety Stock is equal to Safety Stock that shows earlier offset by the number of periods of lead time. Unshifted is when the order for those SKU’s needs to be placed and (Shifted) Safety Stock is in the period it is required. So the choice between Unshifted and not unshifted has to do with how the safety Sock number is used in the ERP system where the results are integrated as described in slide 6 in the link below. Understand what your system does with the safety stock number and date. Does the system: - order the safety stock to arrive by that date? (considering the lead time) - order the safety stock on that date? - Depending upon the answer you may choose to use unshifted vs shifted. Unshifted safety stock can be used if the system uses the date as the date required to order instead of the date the safety stock needs to arrive. http://scn.sap.com/docs/DOC-57609
Backlog Safety Stock: Additional Safety Stock held because of decisions to have less than perfect internal service level at an upstream node. Backlog Safety Stock is included in the total Safety Stock number and will always be less than or equal to Safety Stock, never greater. If Backlog Safety Stock accounts for a large percentage of Safety Stock, this shows that majority Safety Stock is because of imperfect service level from upstream nodes. https://scn.sap.com/thread/3508308
Bluesky
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