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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

    Avg. issue per lead time:

    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

     

    {3} lead time calculation

    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

  • In reply to Martin Handy:

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

    18            4          0            0         (monthly sales)

    -2.833   -2.833  -2.833  -2.833 (minus average issues)  then squared

    230.037889  1.361889  8.025889  8.025889 = 347.666668/12 > 28.97223

    And still having issues cut and pasting .. sorry

     

     

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