SAP_Dynamic Safety Stock Calculation

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Calculating Dynamic Safety Stock

Process Flow

1. During every planning run, the system checks for every MRP element (requirements, plannedorders and so on) whether the available quantity is below the minimum stock level.

2. If stock falls below the minimum stock level due to a requirement, the system creates aprocurement proposal and thus calculates the procurement quantity, so that the available quantityis replenished up to thetarget stock level, that is, the dynamic safety stock.

3. If the maximum stock level is exceeded, the system adjusts the quantities for procurementproposals that are not firmed correspondingly. If the procurement proposal is firmed, the systemdisplays an exception message.

Example

The system determines an average daily requirement of 15 pieces. You have defined a minimum range ofcoverage of 3 days, a maximum range of coverage of 7 days and a target range of coverage of 5 days.

The system calculates the following:

Minimum stock level = 3 x 15 pieces = 45 pieces

Maximum stock level = 7 x 15 pieces = 105 pieces

Target stock level = 5 x 15 pieces = 75 pieces

The available quantity is 40 pieces and is therefore less than the minimum stock level. Therefore, thesystem creates a procurement proposal for 35 pieces (= target stock level 75 pieces actual quantity of40 pieces) during the planning run.

Example for Calculating the Dynamic Safety Stock

Requirements of 1st period: 1000Requirements of 2nd period: 2000Calendar period: WeekPeriod length: Standard days (5 days)Number of periods: 2

a) Calculation of the average daily requirements:

(1000 + 2000)/(2*5) = 3000/10 = 300
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b) Determining the range of coverage

Range of coverage for period 1: 2 DaysPeriod 1: 2 Weeks

Range of coverage for period 2: 4 Days

Period 2: 3 Weeks

c) Calculation of dynamic safety stock:

Average requirements * range of coverage in period 1:

Average requirement * range of coverage 2300 * 4 = 1200

Result:

For the first two weeks starting from the MRP date, a safety stock level of 600 pieces is planned.

For the following three weeks, a safety stock level of 1200 pieces is planned.

SAP Mapping

In SAP, Dynamic Safety Stock can be used to determine the Safety Stock level if the option of DefineRange of Coverage Profile (Dynamic Safety Stock) is set in IMG. Dynamic Safety Stock takes intoaccount

Range of Coverage Profile

The Range of Coverage Profile consists of the parameters which are maintained to calculate the DynamicSafety Stock. The parameters maintained are based on the number of days for which the materialavailability is required. The plan also takes into consideration the fluctuations in the requirements.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.The quantity value can further be limited by defining the

overage

Coverage Profile (Dynamic Safety Stock).

The settings maintained here are at Plant level.The Dynamic Safety Stock is calculated by the formulaDSS = Average Daily Requirement * Range Of CoverageAverage daily requirementsAverage Daily Requirement is calculated by the formula(Requirements in the specified periods) / (Number of days in the total period length).For the calculation of the average daily requirements following parameters must be maintained1. Period indicator - This indicator to used to determine the calendar period for which average dailyrequirements needs to be carried out. Following values can be maintained weeks (W)


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2. Type of period length -this indicator is used to determine the length of the individual periods in detail.

Following values can be maintained:

- if standard days is selected as a period length, the number of days determined per

period must be maintained in the field, No. standard days

3.Number of periods - here, the number of periods are defined which are used to calculate the average

daily requirements.

Determining the range of coverage

The range of coverage can be defined for a maximum of three periods and different coverage for eachperiod can be maintained. To do this, ranges of coverage and the periods in the screen section entitled,

Determine range of coverage. The range of coverage in each of the three periods can be limited by

entering a minimum and a maximum range of coverage. The system checks whether the actual range of

coverage (available quantity / average daily requirements) lies below the minimum range of coverage or

above the maximum range of coverage. If this is the case, the dynamic safety stock level is recalculated

using the information for the target range of coverage.

Define Range of coverage profile:


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Calculation:

Period Month

1st Month 1000

2nd Month 2000

3rd

Month 3000

As per Coverage profile calculates the daily requirements

= (Total Requirements)/No.periods*Period per days

= (1000+2000+3000)/3*20 = 100

Now as per the Coverage profile Minimum stock , target stock and Maximum stock defined as per days

mentioned.

1st

Period (1000+2000+3000)/3*20 = 100, Planned order will be 1000 only


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2nd

Period (2000+3000)/3*20 = 83.333, Target stock will be 5*83.333 = 417, Now planned order will

be = 2417

According to this 417 stock available for next period

3rd

Period 3000/50 = 50, Target stock will be = 5*50 = 250

Total requirement will be = 3000+250=3250, but sock available is 417, so Planned order will be generated

for = 3250-417 = 2833

Documents

SAP_Dynamic Safety Stock Calculation