Calculation of Lead Times in Inventory Planning

In inventory planning, the system performs the combined calculation of the economic order quantity (EOQ) and the safety stock (SFT). In doing so, the system considers the lead times of a product depending on the delivery scenario and on whether you plan to supply a location in your bill of distribution (BOD) with goods using push or pull deployment.

Features

For the combined calculation of the EOQ and SFT you can choose whether you want to plan with the total DRP lead time or with the sum of the compound lead times below. If you want to plan with the DRP total lead time, you specify this in the service profile for the combined calculation of EOQ and SFT in the Use DRP PLT field.

Note Note

The system can only consider your entry in this field if you work with the total lead time in DRP. Otherwise the system plans with the sum of the compound lead times below for the combined calculation of EOQ and SFT, irrespective of your entry in the Use DRP PLT field.

End of the note.

Note Note

If you want to plan with the total lead time, the system also considers the goods receipt processing time as well as the total lead time, to calculate the minimum safety stock.

End of the note.

For more information about the service profile for the combined calculation of EOQ and SFT, see the Implementation Guide (IMG) for Advanced Planning and Optimization under Start of the navigation path Supply Chain Planning (SPP) Next navigation step Inventory Planning Define Service Profile for EOQ/SFT Calculation End of the navigation path .

For more information about the DRP total lead time and the settings relevant for it, see Procurement Lead Times in Service Parts Planning in the section Total Procurement Lead Time.

Lead Time from Supplier to Location in Your BOD

This lead time is the sum of the following component lead times:

Time between two planning runs
Plan approval and review time for distribution requirements planning (DRP)
Communication duration
Planned delivery time
Synchronization of start of goods receipt
Goods receipt processing time

Lead Time from Supplier to Location in Your BOD via a Contract Packager (CP)

This lead time is the sum of the following component lead times:

Time between two planning runs
Plan approval and review time for DRP
Communication duration
Planned delivery time
Throughput time of the CP
Transportation duration from CP to location
Synchronization of start of goods receipt
Goods receipt processing time

For more information about CPs, see Contract Packager.

Procurement Time from One Location to Another Location in Your BOD

This lead time is the sum of the following component lead times:

For locations with the Planned as Push deployment indicator:
- Throughput time of the location
For locations with the Planned as Pull or Pull Only deployment indicator:
- Time between two planning runs
- Goods issue processing time
Transportation duration from the one location to the other
Goods receipt processing time

Lead Time from CP of Parent Location to Child Location

This lead time only exists for locations with the Planned as Push deployment indicator. It is the sum of the following compound lead times:

Throughput time of the CP
Transportation duration from CP to child location
Goods receipt processing time

Lead Time from Location in Your BOD to Another Location in Your BOD via a CP

This lead time is the sum of the following component lead times:

For locations with the Planned as Push deployment indicator:
- Throughput time of the location
For locations with the Planned as Pull or Pull Only deployment indicator:
- Time between two planning runs
- Goods issue processing time
Transportation duration from the location to the CP
Throughput time of the CP
Transportation duration from CP to location
Goods receipt processing time

Lead Time from CP of Parent Location to Location in Your BOD via Another CP

This lead time only exists for locations with the Planned as Push deployment indicator. It is the sum of the following compound lead times:

Throughput time at the CP of the parent location
Transportation time from the CP of the parent location to a second CP
Throughput time of the second CP
Transportation time from the second CP to the location
Goods receipt processing time

Lead Time from Location to Its Virtual Child Location (VCL)

This lead time is for locations with the Planned as Push deployment indicator and is the goods receipt processing time. This lead time is zero for locations with the Planned as Pull or Pull Only deployment indicator.

Lead Time from CP of Parent Location to VCL of This Parent Location

This lead time is for locations with the Planned as Push deployment indicator and is the sum of the following compound lead times:

Throughput time of the CP
Transportation duration from CP to location
Goods receipt processing time

This lead time is zero for locations with the Planned as Pull or Pull Only deployment indicator.