Calculating Dynamic Safety Stock 

Process Flow

  1. During every planning run, the system checks for every MRP element (requirements, planned orders and so on) whether the available quantity is below the minimum stock level.
  2. If stock falls below the minimum stock level due to a requirement, the system creates a procurement proposal and thus calculates the procurement quantity, so that the available quantity is replenished up to the target stock level, that is, the dynamic safety stock.
  3. If the maximum stock level is exceeded, the system adjusts the quantities for procurement proposals that are not firmed correspondingly. If the procurement proposal is firmed, the system displays an exception message.

Example

The system determines an average daily requirement of 15 pieces. You have defined a minimum range of coverage of 3 days, a maximum range of coverage of 7 days and a target range of coverage of 5 days.

The system calculates the following:

Minimum stock level = 3 x 15 pieces = 45 pieces

Maximum stock level = 7 x 15 pieces = 105 pieces

Target stock level = 5 x 15 pieces = 75 pieces

The available quantity is 40 pieces and is therefore less than the minimum stock level. Therefore, the system creates a procurement proposal for 35 pieces (= target stock level 75 pieces – actual quantity of 40 pieces) during the planning run.

The system does not plan the dynamic safety stock as a gross quantity but takes it into account in the net requirements calculation. That means that the system then increases only the quantity of an existing planned order when it is necessary due to the availability situation. If sufficient material quantities to cover the safety stock quantity are already in stock, no additional planned order is created.

In the case of time-phased materials planning, the range of coverage is calculated differently to the method described here. For information, see Range of Coverage for Time-Phased Materials Planning