Hi ,
Can someone please explain exactly how the formula works for auto update safety stock functionality ?
Help document doesn’t elaborate the details enough to understand the logic behind it.
My understanding is that there are 3 parameters which drive the calculation and it uses the Wilson formula ;
Safety stock (pieces) = Safety factor * standard deviation for demand (pieces/period) * square root of part lead time (period)
I understand how the safety factor is calculated using the service rate, my questions are on;
- How exactly “ standard deviation for demand” calculated? Is it looking at the ‘No of issues’ in On Hand Development per Period? and doing the excel calculation of STDEV for No of Issues in that said statistical period you are entering in ‘Calculate Planning Data’ ? ( If the period is 6 , does IFS looks at the 6 records of No of issues corresponding to the past 6 periods and calculate the STDEV?)
- How is ‘Square Root of Part Lead time (period)’ being calculated ? Is it simply the Square root of ‘Purchase Lead time’ in Inventory Part? or is the square root of the lead time being divided by the no of periods?
I did run excel calculations trying to make sense of how IFS works for different combinations , but failed to understand the exact formula
I am keen to know what I am missing
Appreciate if someone can shed some light into how this works.
Kind Regards
Yashodha