Calculating Dynamic Safety Stock
Process Flow
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