How to Use the Internet Based Reverse Dynamic Safety Stock Calculator

Executive Summary

  • This is the reverse dynamic safety stock calculator.
  • This puts a slight twist on dynamic safety stock.

Introduction to the Reverse Safety Stock Calculator

This dynamic safety stock calculator is designed to do the following:

  • Calculate safety stock.
  • Explain the logic behind the mathematics of the dynamic safety stock calculator.

Every safety stock calculator that I was able to find uses the traditional calculation where the final output is the safety stock level. Sometimes you want to set an inventory level, and then see what the service level will be. This is the exact opposite or reverse of how the dynamic safety stock formula calculates.

The dynamic safety stock formula does not provide an easy way to do this. Through a slight adjustment, I have enabled this. It is determined by using this calculation form – although it is a two-step rather than one step process.

What This Safety Stock Calculator Is

The standard dynamic safety stock calculator is problematic in actual usage. For this reason, I created this safety stock calculator which adopts some of the same concepts. But it provides more consistent output. Currently, the calculator does not include lead time variability. In most cases, the vast majority of variability is from the demand rather than lead time side.

How the Safety Stock Calculator Form Works

This form requires input to provide output. However, it also has default values. You can change any input value and the rest of the formula — the output will change immediately. You can continue making changes, and the form will always update without having to press any button or refresh.

Steps to Using the Form

  1. The form requires that you first submit the input.
  2. Next check if the safety stock difference between the calculated value and the safety stock you enter is positive or negative.
  3. It then requires that you adjust the service level until you have a small safety stock difference. This is then the service level you can expect from the safety stock which you have entered.

Note: For some reason, the drop-down field below does not appear to work in Firefox – so if you are using that browser try a different one. Second, when you enter a decimal into the Standard Deviation of Demand and Standard Deviation of Lead Time, you may receive a message “Please enter only digits.” You can ignore that message. The calculator works fine with a decimal point.

For the standard dynamic safety, stock calculator see this article.

Brightwork MRP & S&OP Explorer for Safety Stock

Safety Stock Calculation

The way safety stock is set and sometimes calculated is highly imprecise and problematic. What is needed is a way of calculating safety stock dynamically that is performed in an integrated manner with both constraints and service levels. The Brightwork MRP & S&OP Explorer does exactly this, and it is free to use in the beginning until it sees “serious usage.” It is permanently free to academics and students. See by clicking the image below:

 

References

Safety Stock and Service Level Book

Safety Stock

Safety Stock and Service Levels: A New Approach

Important Features About Safety Stock

Safety stock is one of the most commonly discussed topics in supply chain management. Every MRP application and every advanced planning application on the market has either a field for safety stock or can calculate safety stock. However, companies continue to struggle with the right level to set it. Service levels are strongly related to safety stock. However, companies also struggle with how to set service levels.

How Systems Set Safety Stock

The vast majority of systems allow the setting of safety stock by multiple means (static, dynamic, adjustable with the forecast in days’ supply, etc..). However, most systems do not allow the safety stock to be set in a way that is considerate of the inventory that is available to be applied.By reading this book you will:

  • Understand the concepts and formula used for safety stock and service level setting.
  • Common ways of setting safety stock.
  • Service levels and inventory optimization applications.
  • The best real ways of setting both service levels and safety stock.

Chapters

Chapter 1: Introduction
Chapter 2: Safety Stock and Service Levels from a Conceptual Perspective
Chapter 3: The Common Ways of Setting Safety Stock
Chapter 4: The Common Issues with Safety Stock
Chapter 5: Common Issues with Service Level Setting
Chapter 6: Service Level Agreement
Chapter 7: Safety Stock and Service Levels in Inventory Optimization and Multi-Echelon Software
Chapter 8: A Simpler Approach to Comprehensively Setting Safety Stock and Service Levels