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Define Range of Coverage Profile (Dynamic Safety Stock)

In this IMG activity, you specify the range of coverage profile for calculating the dynamic safety stock.

With the dynamic safety stock , you can determine a safety stock based on requirements and range of coverage. The dynamic safety stock adapts automatically to the changed requirements and is fully available for planning purposes.

You can limit the quantities used in the calculation of the dynamic safety stock by defining maximum and minimum ranges of coverage. You can also limit the period of time by defining different time periods in which the range of coverage is valid.

Periods with different ranges of coverage

Note

In MRP, the dynamic safety stock is added to the order proposal quantity.
You can display the parameters for calculating the dynamic safety stock in the MRP evaluations in the "Period Totals" display.

The system uses the following formula to calculate the range of coverage: Average requirements * Range of coverage

The individual parameters are described below:

The following formula is used to calculate the average daily requirements:
Requirements in the specified periods/Number of days for the total period length
To calculate the average daily requirements, you have to maintain the following parameters:
With this indicator, you specify the calendar period for which you want to calculate the average requirements.
The following entries are possible in this case:
* Weeks (W)
* Months (M)
* Planning calendar periods (K)
With this indicator, you specify the detailed period length.
The following entries are possible in this case:
* Workdays
* Calendar days
* Standard days
If you set standard days as period length, you have to specify the number of days per period in field "Days per period".
Here you specify how many periods you use for calculating the average requirements.
You can specify a range of coverage for up to three different periods and you can maintain a different coverage for each period.

To do this, you have to specify the ranges of coverage and the number of periods in the 'Define range of coverage' screen.

If you only want to maintain one range of coverage with no period limitation, enter your range of coverage parameters for the first period and leave the field 'Number of periods' blank.

You can also limit the range of coverage in each of the three periods by defining a maximum and minimum range of coverage. The system checks whether the actual range of coverage (available quantity / average requirements) exceeds the maximum range of coverage or falls below the minimum range of coverage. If this is the case, the dynamic safety stock is calculated on the basis of the target range of coverage.

Example

Calculation of the average requirements:
(1000 + 2000)/(2*5) = 3000/10 = 300
Average requirements * range of coverage 1:
300 * 2 = 600
That means, for the first two weeks from the MRP date, a safety stock level of 600 parts is planned.
Average requirements * range of coverage 2:
300 * 4 = 1200
That means, for the first three weeks from the MRP date, a safety stock level of 1200 parts is planned.

Activities

Define the range of coverage profile.