Safety Stock Calculation - HOW TO CALCULATE SAFETY STOCK

Determine the demand for stocks of essential items. Usually calculated what is known as the average daily usage of each element. A common approach is to use the total consumption of this item for a specific example of a period of one calendar month. By dividing the total consumption in the same day of the month safety stock calculation, you get on average use per day.

Predicting demand changes. Taking into account factors such as the historical use of the shares for the same periods of the past five years as well as the expected changes in consumer orders for the next period, it may be a good idea if there will be a safety stock calculation substantial change on average daily use of items in stock.

When factors indicate that a recovery in demand, use this safety stock calculation information to adjust the projected average daily use to determine how many units should be ordered and also create a realistic schedule for recurring orders.

Identify the latency between ordering and delivery dates. Working with suppliers to determine the average amount of time needed to process orders a specific amount from the date of the safety stock calculation order and ends with the arrival.

This will help you adjust the amount of the order to ensure that sufficient materials are available to maintain production until any subsequent safety stock calculation order is processed and received.

Add a percent difference of material defects. This means that if the operation usually requires the replacement of 10 units per week each of the components, it is assumed that 2 of the 10 units ordered are defective in any way and may reduce the production speed.

To avoid this, safety stock calculation increase the amount of their orders to allow the safety stock calculation possibility that there is a sufficient safety stock to compensate for the deficiencies of the possible components for at least two periods subsequent orders.

Make some compensation for late deliveries. Factors beyond the control of the sender as a natural disaster can cause order issued a few days later than expected. Enable it by setting safety stock calculation limits in safety stock so that sufficient materials on hand to maintain production for a short time, despite the delay.

Examine the use of safety stock calculation on a regular basis. Schedule Entries to be held at least once a month, even though every week or every two weeks can also be a viable option for companies with a high rate of production.

Consider the changes that indicate a recovery in the safety stock calculation average daily consumption was not originally planned, and use this data to adjust the amount of planned orders that have not yet been delivered.