# Safety Stock Journal - the Mathematics please

Does anyone have documentation of how Safety Stock Journal values are derived? I am running AX2012.

I am not concerned about the simple periods cover calculation.

I am more interested in how Standard Deviation and Service levels play their part.

I am statistically-minded, but will steer away from the text books in the hope that someone has the answer.

TIA

George

Hi … the bits below I have cut and paste from notes I made myself about 18 months ago, I hope they are useful to you and make sense (and indeed accurate)

If not, perhaps send me yours when you work it out …

Regards

Martin

This is calculated either by the Avg. issues per month divided by 30 days, hard coded (default number of days) or if the ‘working days’ is checked on the lead time (on the item record, item coverage) then it uses a hard coded method of 5/7ths (30 / 7 * 5) = 21.4286

Safety stock calculation using standard deviation method:

{1} calculate the monthly sales for the period and averaged

May

June

July

Aug

Sept

Oct

Nov

Dec

Jan

Feb

March

April

Total

Average issue

0

2

0

0

0

10

0

0

18

4

0

0

34

34/12 = 2.8333

{2} calculate the monthly std. deviation

0

2

0

0

0

10

0

0

18

4

0

0

Monthly Sales

-2.8333

-2.833

-2.833

-2.833

-2.833

-2.833

-2.833

-2.833

-2.833

-2.833

-2.833

-2.833

minus [-]Average issues,

Then (sqr ) c2

8.025889

0.693889

8.025889

8.025889

8.025889

51.365889

8.025889

8.025889

230.037889

1.361889

8.025889

8.025889

=347.666668/12

28.97223

Ö28.97223

= 5.38

This is the monthly std. deviation

For 1 day this is 1/30 = 0.0333 Ö = 0.182574

{4} Minimum quantity to order

Safety factor (see service level percentages) x monthly std. deviation x lead time

4 x 5.38 = 21.52 x 0.182574 = 3.928992 (rounded to 4, see UOM number of places to round)

Safety stock calculation using average monthly issues and factoring

{1A} Calculate the average monthly issues (same as above) = 2.8333

{2A} Then (if not already known) calculate the average daily issues for the lead time 2.8333/30 = 0.0944

{3A) Proposal calculation

Ave. issue per lead time in days x factor used for multiplying x (at least 1 days lead time otherwise zero will be ordered)

0.0944 x 10 = 0.944 x 1 = 0.944 rounded up to 1

Don’t think the cut and paste worked well on {2} … this bits missing from the end…