Transportation safety stock

Variability in transportation lead time increases the safety stock at the destination; that is, supply uncertainty. You can quickly estimate the cost of additional inventory holding based on transportation lead time variability.

When assessing supply uncertainty, consider the following:

Supply uncertainty is defined as:

When accounting for transportation lead time variability, the standard deviation of demand during lead time becomes:

Safety stock, assuming a 95% service level, is then defined as:

Two columns in the Network Inventory Summary output table provide information about the transportation safety stock.

• Transportation Safety Stock – Displays any safety stock held in transportation. Safety stock can be held as a result of transportation lead time variability. This is separate from the safety stock quantity at the destination.
• Transportation Safety Stock Cost – Displays the cost of any transportation safety stock based on the Inventory Carrying Cost in Model Settings.