# Dynamic Safety stock calculation with help of the Coverage profile

Dynamic Safety Stock can be used to determine the Safety Stock level

The Dynamic Safety Stock is calculated by the formula

Dynamic Safety Stock = Average Daily Requirement * Range Of Coverage

The Range of Coverage Profile consists of the parameters which are maintained to calculate the Dynamic Safety Stock. The parameters maintained are based on the number of days for which the material availability is required. Here the number of days is taken in the range of coverage for which the material must be available. Subsequently based on this coverage profile system calculates requirements in MRP Evaluations & creates the order proposals

1. Maintain the Range of coverage profile (T:code: OMIA)

Same coverage profile maintained in material master MRP2 view

• Period Indicator: M (Month), Calendar Period to calculate the average requirement,

• Number of Period: 3 ( 3 Period of  Monthly requirement)
• Type of Per Length  = 3 (Standard Days), In this case you enter the the no of days per period, Here no of days per Period is 20,

Type of Per length   =1 (Workdays) consider the factory calendar

=2 (Calendar Days) Consider Total calendar days

• No of period 3, and monthly requirement and divide by standard period of 20 days to derive the average daily requirement

• Range of Coverage profile with no of period 3 with target safety stock to cover 3 days.

• Second Range of coverage profile target safety stock to cover 5 days, and this period consider as long as till end of the demand
• PIR created in system with help of the MD61

• MD04 screen view before run MRP

• MD04 screen view after run MRP

• Dynamic safety stock Calculation

1.    Requirement of three month, (Oct,Nov,Dec), Here system consider three month because of Period maintained in coverage profile is “3”

(40+100+120)/ (3 (Period) X 20 (Standard Days of each period)) = 4.33 Requirement/day

4.33 x 3 (Target days of first range of coverage profile) = 13 Qty (Period 1)

For first month requirement is 40+13 =53 Qty, system generate the Planned order for same qty

2.   Now, for month(Nov, Dec, and Jan)

(100+120+60)/3X20 = 4.7 Requirement/day

4.7 X 3=15 (Period 2 )

3.   Now for month (Dec, Jan and Feb)

(120+60+80)/3X20 = 4.3 Requirement/day

4.3X3= 13 (Period 3)

Note:  Target days 3 consider three times because of no of period 3 maintained in first range of coverage profile. After 3 period systems consider target days 5

4.    Now for Month (Jan, Feb)

(60+80)/3×20 = 2.33 Requirement/day

2.33*5 (Target days of second range of coverage profile) = 12 (Period 4)

5.   Now for month (Feb)

80/3×20 = 1.33 Requirement/day

1.33*5 = 7 (Period 5)

Please refer below snap for detail information

I hope this document helpful to you understand the basic of Dynamic safety stock calculation

Request to expert  review and suggest if any thing wrong and missing in this document

Regards

Umesh Mali

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Nice document Umesh!

thanks for sharing..

Even I tried sharing the same after my issue got resolved, but dont know why it got rejected.. ðŸ™‚

Regards

Ravindra Kulkarni

Umesh Mali
Blog Post Author

Thanks Ravindra ,

Nice document Umesh.

Umesh Mali
Blog Post Author

Thanks Caetano for comment and rating this document ,, ðŸ™‚

Nice Document..Umesh

Umesh Mali
Blog Post Author

Thanks Rohit and Prashant for review this document,

Very valuable document. Thanks for taking the time to explain this.

All the best for you!

Kind Regards,

Mariano

Umesh Mali
Blog Post Author

Thanks mariano for Complement,,
All the best for you too, ðŸ™‚

Regards

Umesh Mali

Hi Umesh,

Regards,

Anupam Sharma

Umesh Mali
Blog Post Author

Thank you sir,

Very nice Doc

Umesh Mali
Blog Post Author

Thanks Rao for review this document,,

Really informative document,Thanks Umesh.

Regards,

Deejoy

Umesh Mali
Blog Post Author

Thanks Dee Joy ,, ðŸ™‚

Hi Umesh,

Well explained and Good Doc.......

Thanks Umesh, This is a really Nice Document.

Umesh Mali
Blog Post Author

Thanks Naresh and Manoj for review this document ,, ðŸ™‚

Hi Umesh - great document.  Is the Range of coverage profile only relevant for MRP type = PD?  Is it relevant for Reorder point planning?

Umesh Mali
Blog Post Author

Hello Robert

Thanks for review the document  .. ðŸ™‚

Nice document Umesh. I am from MM background and had PP related incidents to handle and this helped me to do that. Keep up the good work.

Thanks again,

Prashant

Thanks Umesh for document,

But I have a question. I want to talk about the first calculation. Isn't there a way to calculate (100+120+60)/3 instead of (40 + 100 + 120) / (3)? I don't want current(week,day,month) requirement to consider.

Regards,

Naile