Safety Stock Optimization

Multi-echelon Safety Stock Optimization determines an appropriate safety stock calculation based on the demand class that resulted from Demand Analysis. Safety Stock Optimization selects the lead-time demand distribution (normal, gamma, negative binomial and mixture of distributions rule) depending on the Demand Class, and mean and variance of lead-time demand (see Lead Time in Safety Stock Optimization for more information). Safety Stock Optimization uses the guaranteed service time approach to calculate safety stock. While this is applied to all kinds of demand, the calculation varies based on the Demand Class.

To learn more about Safety Stock Optimization, refer to:

• Safety Stock Optimization inputs
• Causes of infeasibility in Safety Stock Optimization
• Service definition
• Lead time in Safety Stock Optimization
• Determining the inventory policy
• Safety Stock Optimization outputs
• Forecast Metrics

Causes of infeasibility in Safety Stock Optimization

There are a number of conditions that can result in infeasibility when running Safety Stock Optimization. These conditions include:

• Missing inventory policies.
• Minimum Service Time conflict, which can cause negative coverage. The Minimum Service Time is found in the Inventory Policies table.
• Non-stocking at customer-facing facilities. By default, customer-facing facilities have zero service time to the customer, so they must hold stock.
• Minimum Safety Stock and Maximum Safety Stock constraints, which can cause conflicts with service requirements. The Minimum Safety Stock and Maximum Safety Stock fields are found in the Inventory Policies table.