Question: What are the different safety stock methods used by DRP?
Answer: This is the current list. New standard (and custom) safety stock methods may be developed to handle the needs of specific situations.
Note For the calculations to function properly, the parameter names must be entered exactly as listed. These same parameter names can be used for different safety stock methods.
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Safety Stock Method / Program Name |
Parameter |
Type |
Default Value |
Description |
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% - Forecast Periods (methssft.p) |
This safety stock method looks at the future forecast to determine the safety stock level, subject to any minimum quantity specified in the product location record. This method is typically used for a long lead time product that is being managed on a time-phased basis. Safety stock quantity is used in the calculation of the Desired On-Hand row in Product DRP Management. |
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% of time periods |
Decimal |
50.0 |
This is the percentage to apply to total remaining demand (remaining sales forecast and remaining dependent forecast) for the number of forecast demand periods. |
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Expected Normal Forecast |
Logical |
NO |
NO indicates that if an expected normal forecast is entered for a product/location in Product Location Maintenance, that forecast is not used instead of the actual forecast. If this parameter is changed to YES, the expected normal forecast for the product/location is used. |
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Include Promotions |
Logical |
NO |
NO indicates that promotions are not included in safety stock calculations. If this parameter is changed to YES, promotions are included in safety stock calculations. For an example of how this parameter affects calculations, see Include Promotions Example. NOTE This parameter is only used for calculations if the Promotional Forecast Logic forecast method parameter is set to Include. |
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Planned Recpt Periods |
Decimal |
1 |
This is the number of planned receipt periods to consider when calculating safety stock quantities. This value is a number of days, weeks, or months depending on how the BOM Planned Recpt Bucket parameter is set up for the reorder quantity method of the buying method. |
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Example % of time periods is 50% and the planned receipt periods is 1 month:
% of time periods is 50% and the planned receipt periods is 2 months:
December Safety Stock = 50% of January + February (next 2 periods) Total Remaining Demand = (10,024 + 9,853)(.50) = 9,939 January Safety Stock = 50% of February + March (next 2 periods) Total Remaining Demand = (9,853 + 9,735)(.50) = 9,794 |
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Safety Stock Method / Program Name |
Parameter |
Type |
Default Value |
Description |
|
% of Lead Time Usage (methsslt.p) |
This safety stock quantity method calculates based on the lead time usage rate. This method is typically used for a short lead time product that is being managed on a Reorder Trigger basis. Typically used in conjunction with the Gordon Graham buying methodology. |
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% of Usage |
Integer |
50.0 |
This is the percentage to apply to the usage rate during the lead time. |
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Expected Normal Forecast |
Logical |
NO |
NO indicates that if an expected normal forecast is entered for a product/location in Product Location Maintenance, that forecast is not used instead of the actual forecast. If this parameter is changed to YES, the expected normal forecast for the product/location is used. |
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Include Promotions |
Logical |
NO |
NO indicates that promotions are not included in safety stock calculations. If this parameter is changed to YES, promotions are included in safety stock calculations. For an example of how this parameter affects calculations, see Include Promotions Example. NOTE This parameter is only used for calculations if the Promotional Forecast Logic forecast method parameter is set to Include. |
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Example The percentage of usage is 50%.
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Safety Stock Method / Program Name |
Parameter |
Type |
Default Value |
Description |
|
Mean Avg Deviation (methssmad.p) |
This safety stock method calculates the actual to forecast error rate to determine the amount of safety stock required given a specific order fill rate. This method is typically used for a short lead time product that is being managed on a reorder trigger basis. Typically this is used in conjunction with the demand forecasting buying methodology. The method compensates for the inaccuracy of the forecast by factoring in the Mean Average Deviation to develop safety stock commensurate with static vs. erratic demand patterns. |
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Default Order Fill |
Integer |
95 |
This is the desired order fill rate from available stock. Note This percentage should not be less than 80%. |
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Expected Normal Forecast |
Logical |
NO |
NO indicates that if an expected normal forecast is entered for a product/location in Product Location Maintenance, that forecast is not used instead of the actual forecast. If this parameter is changed to YES, the expected normal forecast for the product/location is used. |
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Include Promotions |
Logical |
NO |
NO indicates that promotions are not included in safety stock calculations. If this parameter is changed to YES, promotions are included in safety stock calculations. For an example of how this parameter affects calculations, see Include Promotions Example. NOTE This parameter is only used for calculations if the Promotional Forecast Logic forecast method parameter is set to Include. |
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Example Mean Average Deviation is 27, Default Order Fill is 95% (equivalent to a SF factor of 2.0), the lead time is 2 weeks, and order fill is 4 weeks. The safety stock is 28 based on the formula: Safety Stock = Safety Factor x Mean Average Deviation x [.1 + .07(Lead Time in Weeks + Order Frequency in Weeks)] Safety Stock = 2 (Safety Factor equivalent to a 95% fill rate) x 27 x [.1 + .07(2 + 4)] Safety Stock = 2 x 27 x .52 Safety Stock = 28 |
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Safety Stock Method / Program Name |
Parameter |
Type |
Default Value |
Description |
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Product Class (methsspc.p) |
This safety stock method calculates safety stock based on DRP product classes for each product/location and a specified number of periods. |
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Class 1-15 |
Character |
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These are the DRP product classes. For information on creating DRP product classes, see DRP Product Class Maintenance. |
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Class 1-15 # of Periods |
Integer |
1 |
These are the number of periods used to calculate safety stock for each specified DRP product class. Each value is in weeks or months, depending on the time buckets used for schedule management |
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Include Promotions |
Logical |
NO |
NO indicates that promotions are not included in safety stock calculations. If this parameter is changed to YES, promotions are included in safety stock calculations. For an example of how this parameter affects calculations, see Include Promotions Example. NOTE This parameter is only used for calculations if the Promotional Forecast Logic forecast method parameter is set to Include. |
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Example Product A in location B is assigned to DRP product class C. The product/location is set up to use a buying method with the Product Class safety stock method. The safety stock method is set up to use 3 periods for calculating safety stock of DRP product class C. If the current month is June, and forecasted demands for July, August, and September are 75, 100, and 125, then the safety stock is calculated as 300 (75 + 100 + 125). |
Note If the forecast is monthly and the schedule is weekly, the weekly allocation of monthly forecast is based on the unconsumed monthly forecast (not the net monthly sales). For example, if monthly forecast for June is 120 units and June has 4 weeks, the weekly forecast allocation is 30 units. If 80 units were sold in the first week of June, 40 units are left for the remaining weeks. However, for calculating the safety stock, 30 units of forecast are used for the second, third, and fourth weeks of June.
Scenario #1 - Promotional Forecast Logic = Include; Include Promotions = Yes
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October |
November |
December |
January |
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Manage Product Forecasts Tab |
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Promotional Forecast |
500 |
300 |
100 |
0 |
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Customer Forecast |
400 |
500 |
600 |
800 |
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Actual Forecast |
900 |
800 |
700 |
800 |
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Adjusted Net Sales |
0 |
0 |
0 |
0 |
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Remaining Forecast |
900 |
800 |
700 |
800 |
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Forecast to Use |
900 |
800 |
700 |
800 |
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DRP Schedule Management Tab |
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Remaining Sales Forecast |
900 |
800 |
700 |
800 |
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(Safety Stock = 50% of next 2 periods) |
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Reduce by Promotional Forecast |
0 |
0 |
0 |
0 |
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Remaining Sales Forecast Adjusted for Promotional Forecast |
900 |
800 |
700 |
800 |
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Safety Stock |
750 |
750 |
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Scenario #2 - Promotional Forecast Logic = Include; Include Promotions = No
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October |
November |
December |
January |
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Manage Product Forecasts Tab |
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Promotional Forecast |
500 |
300 |
100 |
0 |
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Customer Forecast |
400 |
500 |
600 |
800 |
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Actual Forecast |
900 |
800 |
700 |
800 |
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Adjusted Net Sales |
0 |
0 |
0 |
0 |
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Remaining Forecast |
900 |
800 |
700 |
800 |
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Forecast to Use |
900 |
800 |
700 |
800 |
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DRP Schedule Management Tab |
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Remaining Sales Forecast |
900 |
800 |
700 |
800 |
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(Safety Stock = 50% of next 2 periods) |
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Reduce by Promotional Forecast |
-500 |
-300 |
-100 |
0 |
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Remaining Sales Forecast Adjusted for Promotional Forecast |
400 |
500 |
600 |
800 |
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Safety Stock |
550 |
700 |
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