Hi,
We are considering using the auto update of safety stock in IFS10. What is considered best practice when setting the “service rate” percentage in planning hierarchy for A, B & C class products?
Hi
Standard best practice to use the service rate as 95% initially and later you can change it as per the business needs.
Service rate is the probability of satisfying the demands/needs within the Leadtime.
Regards,
Mithun K V
+1Hi Mithun,
Thankyou for the reply. Best practice would be to apply 95% across all three ABC class products rather than 95% for A class and a slightly lower percentage for B&C class items?
Regards
Luna
Hi
The service rate is the probability of stock out situation for a part which can be managed without affecting the demand needs. This is usually be calculated as {(annual demand – tolerable stock out)/annual demand}
So, if the parts are easily available, have a shorter lead time and if the suppliers are reliable then you go with a less service rate as this value directly impacts the safety stock. As A class items are fast moving and critical you can have high service rate and for B & C you can reduce it accordingly
Regards,
Mithun K V
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