Hello all,

Range of Coverage profile understanding document:

Coverage Profile :

Coverage profile is used for calculating the dynamic safety stock. It  is a statistical calcuation on the basis of average daily requirement.  The dynamic safety stock is calculated depending on the requirements within the specified period and the range of coverage.

Dynamic Safety Stock :

This method will take the demand fluctuation into account i.e safety stock value will change according to demand, for example PIR. It is calculated as below:

Dynamic Safety stock  = Average Daily Requirement (ADR)  ( X )

                                        Range of coverage

Average Daily requirements = Sum of Requirements in the no. of periods (/ )

no. of days in the number of periods.

Range of Coverage  = Current Stock / Average Usage per day.



Maintain in Material master as below



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Configuration (SPRO)


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Test case 1: requirement falling in rage of coverage in the first period , here the target is 3

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Running MRP

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Planned order has been created for 112 qty

Explanation:

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The requirement falls in 1st period (month that is 30 days because it is maintained with type 2 as calendar days)

The calculation formula is

Number of days= period 1 *30=30

Requirement Qty= 100

Target Range of Coverage in Period 01= 3

So, average Daily requirement =100/30= 3.33 that is 4

Safety stock requirement=4*(target 3 ) =12

So, the planned order qty is= 100 (req qty) + 12 (safety stock) that is 112

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Now we will go for test 2: We will create a requirement in the maintained period in coverage profile

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Here the planned order will be created for 120 qty

Explanation:

Number of days= period 1 *30=30

Requirement Qty= 100

Target Range of Coverage in Period 01= 5

So, average Daily requirement =100/30= 3.33 that is 4

Safety stock requirement=4*(target 5)=20

So, the planned order qty is= 100 + safety stock 20 that is 120

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would like to share the document for easy understanding the functionality for coverage profile and the calculation of dynamic safety stock using coverage profile.

Thanks

Ravindra Kulkaarni

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3 Comments

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  1. S0007029117 SAP

    The explanation is good. But for the material the procurement type is F (external) and you have created PIR for the same material. Is it a standard practice? I am not sure.

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    1. Ravindra Kulkarni Post author

      Hi

      you are right, but for the simple understanding i have created the PIR.

      there should not be any issue with creating PIR as the MRP will generated Planned order which can be converted to Purchase requisition and so to purchase order. 

      by generating a requirement for the parent material it would have generated the Dependent requirement and purchase requisition but it will be bit one more step to understand the functionality of coverage profile.

      Hope it makes your point clear.

      Thanks

      Ravindra Kulkarni

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  2. Gamal Khallaf

    Hi Ravindra ;

    THanks for the documents above;

    I was reviewing the process and I have one more question about the complete setup for the dynamic safety stock.

    After setting up the coverage profile and in same time if minimum safety stock is maintained then system will automatically create planned orders (requirements) to compansate the difference between min. SS and the dynamic ss calculated according to the average requirements, Correct ?

    My question is :

    How can I setup also an upper threshould for the safety stocks calculated from the coverage profile if they are going to exceed certain amounts. (For example to avoid building extra stocks if there was a sporadic demand increase in period under calculation)

    Thanks for the support.

    Gamal

    (0) 

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