Safety stock calculation

I have been reading the planning white paper for so many times but somehow it is not that clear how the safety stock is replenished. How is it related to reorder cycle and lead time?

If possible, give me a scenario (not from the manual please)


You have a safety stock of 100.

You have inventory of 120

You have a reorder cycle of 1W

You have a demand pattern of

10 x 01/10/08

20 x 10/10/08

20 x 20/10/08

40 x 21/10/08

Your replenishment will be

20 required for 10/10/08

60 required for 20/10/08

Depending upon your lead time this will denote the suggest “order date”, i.e. to receive it on the 10/10/08 you need to have ordered it on x date.

Hi Adam,

Thanks for the quick reply. I created it in my 5.0 SP1 version and it was exactly what you said. I checked the order tracking and both of the proposals are due to safety stock.

Can you explain why it replenished 20 at 10/10 and 60 at 10/20? Am I correct in how i interpret it?

10 x 01/10/08 (covered by inventory 10) → inventory = 110

20 x 10/10/08 (covered by inventory of 20; but need 10 due to replenish safety stock) → proposal of 10; due date = 10/10

20 x 20/10/08 (covered by safety stock of 20; need 20 to replenish safety stock) → proposal of 20; due date = 10/20

40 x 21/10/08 (covered by safety stock of 40; need 40 to replenish safety stock) → proposal of 40; due date = 10/21

However, since there is a reorder cycle of 1W, the 2 proposals were combined. I actually tested it without reorder cyle (meaning 1D by default) and it proposed 3 lines… I am just wondering if I interpret it correctly.

So in short, we are consuming the safety stock but need to replenish it as it is below safety stock?

Thanks again!

Yep - your understanding is correct in all aspects. [:D]

Thanks! [;)]