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Author's profile photo Umesh Mali

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,

CP-1.JPG

  • 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

                                                      /wp-content/uploads/2014/10/cp_2_558661.png

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

cp-3.JPG

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

cp-4.JPG

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

cp-6.JPG

  • MD04 screen view before run MRP

cp-7.JPG

  • MD04 screen view after run MRP

cp-8.JPG

  • 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

cp-9.JPG

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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      23 Comments
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      Author's profile photo Former Member
      Former Member

      Nice document Umesh!

      thanks for sharing..

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

      Regards

      Ravindra Kulkarni

      Author's profile photo Umesh Mali
      Umesh Mali
      Blog Post Author

      Thanks Ravindra ,

      Author's profile photo Caetano Almeida
      Caetano Almeida

      Nice document Umesh.

      Author's profile photo Umesh Mali
      Umesh Mali
      Blog Post Author

      Thanks Caetano for comment and rating this document ,, 🙂

      Author's profile photo Former Member
      Former Member

      Appreciate your efforts Umesh ..!! Really like your docs.

      Author's profile photo Prashant Deshpande
      Prashant Deshpande

      Nice Document..Umesh

      Author's profile photo Umesh Mali
      Umesh Mali
      Blog Post Author

      Thanks Rohit and Prashant for review this document,

      Author's profile photo Mariano Cabalen
      Mariano Cabalen

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

      All the best for you!

      Kind Regards,

      Mariano

      Author's profile photo Umesh Mali
      Umesh Mali
      Blog Post Author

      Thanks mariano for Complement,,
      All the best for you too, 🙂

      Regards

      Umesh Mali

      Author's profile photo Anupam Sharma
      Anupam Sharma

      Hi Umesh,

      Appreciate your efforts... Keep sharing.

      Regards,

      Anupam Sharma

      Author's profile photo Umesh Mali
      Umesh Mali
      Blog Post Author

      Thank you sir,

      Author's profile photo Former Member
      Former Member

      Very nice Doc

      Author's profile photo Umesh Mali
      Umesh Mali
      Blog Post Author

      Thanks Rao for review this document,,

      Author's profile photo Deepak Jharkharia
      Deepak Jharkharia

      Really informative document,Thanks Umesh.

      Regards,

      Deejoy

      Author's profile photo Umesh Mali
      Umesh Mali
      Blog Post Author

      Thanks Dee Joy ,, 🙂

      Author's profile photo Former Member
      Former Member

      Hi Umesh,

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

      Author's profile photo Former Member
      Former Member

      Thanks Umesh, This is a really Nice Document.

      Author's profile photo Umesh Mali
      Umesh Mali
      Blog Post Author

      Thanks Naresh and Manoj for review this document ,, 🙂

      Author's profile photo Aleem Daya
      Aleem Daya

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

      Author's profile photo Robert Chicvak
      Robert Chicvak

      Helpful detailed document, well done!

      Author's profile photo Umesh Mali
      Umesh Mali
      Blog Post Author

      Hello Robert

      Thanks for review the document  .. 🙂

      Author's profile photo Prashant Kumar
      Prashant Kumar

      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

      Author's profile photo Naile Büşra Yaşar
      Naile Büşra Yaşar

      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