Safety Stock Optimization inputs

The following are the required and optional inputs for Safety Stock Optimization.

• Demand profiles – These are the demand profiles generated by Demand Analysis as found in the Customer Demand Profile and Site Demand Profile table.
  You cannot use input pipes to populate the Customer Demand / Customer Orders table when using Safety Stock Optimization.
• Lead-time and lead-time variability – This is the time required to serve the demand. Variability is introduced using the Source Lead Time in the Site and Customer Sourcing Policies tables, Fixed Order Time in the Production Policies table, and the Transport Time in the Transportation Policies table. For information about lead-time, refer to Lead Time in Safety Stock Optimization.
• Product Type – The Type field in the Products table determine whether the Safety Stock inventory must be integer values or not. This is one of:
  • Continuous – This value is used for products that can occur in fractional quantities.
  • Discrete – This value is typically used for products that are produced in integer quantities.

  The Expected Type <x> Service values in the Safety Stock Optimization output tables are affected by the product type. The expected service values will be the same as the Target Service Level for continuous products, and greater than or equal to the Target Service Level for discrete products. The Type is used when Safety Stock Optimization creates the final results, by rounding up the Safety Stock value to an integer if the Type is "Discrete".

• Inventory Policies – Values in the Inventory Policies affect safety stock:
  • Service Requirement – This is a probability measure that represents how capable a site is of providing product to others downstream. You can define this per site-product-period. The value in the Inventory Policies table is used unless you define period-specific values in the Inventory Policies Multi-Period table.
  • (Optional) Safety stock and service time constraints as defined in the Inventory Policies and Inventory Policies Multi-Period tables:
    • Minimum Safety Stock
    • Maximum Safety Stock
    • Minimum Service Time
    • Maximum Service Time
  • Constraints are also defined in the Transportation Policies and Transportation Policies Multi-Period tables:
    • Minimum Replenishment Quantity
    • Minimum Service Time
    • Maximum Service Time

The following inputs are specified in the Safety Stock Optimization options.

• Service Definition – This is one of:
  • Type 1 (Probability of not stocking out)
    Type 1 is the probability of not stocking out in a risk period.
  • Type 2 (Quantity fill rate)
  • Type 2 (Undershoot)
  • Type 3 (Ready Rate)

    Type 2 (Quantity fill rate), Type 2 (Undershoot) and Type 3 (Ready Rate), as well as Demand Analysis, require either the Minimum Order Quantity (Production Policies) or one of Replenishment Frequency (Transportation Policies) or Production Frequency (Production Policies) to recommend a batch size. Type 1 does not require these for Safety Stock Optimization and if they are not defined, the Minimum Order Quantity is assumed to be 1 for Demand Propagation.

• Safety Stock Rule – Determines the approach for Safety Stock Optimization. This is one of:
  • Multi-Echelon – Safety Stock Optimization considers the safety stock at all tiers (echelons) at one time. Service time is a decision variable in multi-echelon safety stock optimization. If the service time is zero in all cases, multi-echelon is equivalent to single-echelon.
  • Single-Echelon – Safety Stock Optimization assumes each location is independent and does not consider service time.
• (Optional) Lead Time Bucket Precision – This value is the interval of time used to construct the safety stock curve. The default value is Auto, but you can enter a precision in units of DAY. The Lead Time Bucket Precision should be an integer of the Aggregation Level to prevent a loss of precision.
• Advanced Safety Stock Options – These options allow you to control the solution method (linear or dynamic programming, or automatically selected by Safety Stock Optimization) and the number of nodes in the piecewise approximation of the safety stock curve. Additional options enable you to batch orders based on Replenishment Frequency or Minimum Order Quantity.