Combined Planning of EOQ and SFT
Use
With the combined planning of the economic order quantity (EOQ) and safety stock (SFT) the system helps you to optimize your stockholding and purchasing costs and your target service level.
If you increase the purchase order quantity, the number of purchase orders is reduced and thus the ordering costs are also reduced. However, at the same time, the average stock increases and thus the stockholding costs increase. By flexibly adjusting the purchase order quantity and thereby calculating the EOQ, the system minimizes the total costs. To simultaneously ensure a certain target service level, the system must secure the standard deviation of the forecast with SFT so that the product is, as far as is possible, always deliverable. The system defines the safety stock so that it can achieve a target service level that you define, for example 80 percent.
Prerequisites
You have made the relevant master data and Customizing settings for the combined calculation of EOQ and SFT. For more information, see Settings for the Combined Calculation of EOQ and SFT .
Features
Considering Dependency Between EOQ and SFT
If there is a large quantity of a product at a location, it is highly likely that this location product is also deliverable at that time. This means that with an increased purchase order quantity, the service level also increases. It also means that for certain purchase order quantities, the safety stock can decrease, or even be zero. A reduced safety stock does reduce the stockholding costs but it also reduces the service level . To achieve a defined target service level and also to optimize the purchase order and stockholding costs, the system must calculate the EOQ and SFT with mutual dependence.
Considering the Sales Behavior of a Location Product
During the combined calculation of the EOQ and SFT, the system considers the sales behavior of a location product. The system differentiates between location products with constant demand and location products with intermittent demand. Depending on this, the system either chooses normal or Poisson distribution as the base model. For more information, see Decision Between Normal and Poisson Distribution .
Repair Safety Stock
If you use the
repair or buy function
in DRP, you can implement the Business Add-In (BAdI)
BAdI: Calculate Safety Stock for Repairs
(/SAPAPO/PINV_REPSFT) and define how the system is to determine the repair safety stock.
EOQ and SFT for Location Products Planned Using a Reorder Point
For locations planned in
reorder-point-based planning mode
, the system does not perform combined calculation of EOQ and SFT. If you want to calculate the EOQ and SFT for these products as well, you can implement the BAdI
BAdI: Calculate EOQ and SFT for Products Planned Using Reorder Point
(/SAPAPO/PINV_ROP_EOQSFT) and use it to define a separate calculation of EOQ and SFT.
For more information, see the Implementation Guide (IMG) forAdvanced Planning and OptimizationunderSupply Chain Planning
Service Parts Planning (SPP)
Business Add-Ins (BAdIs) for Service Parts Planning (SPP)
BAdIs for Inventory Planning
BadI:Calculate EOQ and SFT for Products Planned Using Reorder Point.
