The following formula is used for calculating Safety stock:
| (SQRT of Contribution value lower level + IC safety stock ) * DRP SST Percentage) |
Clarification of “Contribution value lower level” in the formula
A contribution value (see Example below) is calculated for each demanding warehouse where Percentage is greater than 0. The contribution value is added to a total value for each distribution level.
The total contribution value is used in the formula when calculating safety stock for the supplying warehouse, i.e. it is only for a supplying warehouse where the value can be greater than 0.
How to calculate value 625 for warehouse C1
Contribution value from lower warehouse = 0
Safety stock from item warehouse file = 100
DRP SST Percentage from item warehouse file = 25
Square root of 0 = 0
0 + 100 = 100
100 x 25 % = 25
25 exponential2 = 625
How to calculate value 8562, 634 for warehouse B1
Contribution value from whs C1 = 625
Contribution value from whs C2 = 1406,25
Safety stock from item warehouse file = 140
DRP SST Percentage from item warehouse file = 50
Square root of 625 + 1406,25 = 45,069
45,069 + 140 = 185,069
185,069 x 50 % = 92,535
92,535 exponential2 = 8562,634
Example
Below is an example of how to calculate the Safety stock for DRP items:
Calculation
For the purpose of this example, safety stock is decreased from 720 (which is the total IC calculated safety stock for all warehouses) to 690 by using the new formula. Note: If you change so that all warehouses have a percentage of 100, i.e. safety stock will only be stored on warehouse A1, you will get a calculated safety stock of 503. If you compare this with 720 which is the total IC calculated safety stock for all warehouses, you will decrease safety stock with 217.
Related topics
- About supply planning
- Create the base supply plan version
- Create a supply plan simulation
- Calculate the supply plan values
- Calculate lower level requirements from supply plan
- Maintain the supply values
- Run the IC calculation from the supply plan program
- Create orders from a supply plan
- View the safety stock calculation for a warehouse in a supply plan