ascp io safety stock calc lead time

7/22/2019 ASCP IO Safety Stock Calc Lead Time

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dvanced Supply chain Plan (ASCP) and Inventory Optimization (IO) Safety Stock Calculation Lead Time

have a distributed Advanced Supply chain Plan (ASCP) and Inventory Optimization (IO) plus Demantra.

emantra is not the focus of this paper. For the test I have created a forecast with Weekly buckets on the Source, setup item

ad time, sourcing rules, assignment sets and all relevant setups in ASCP and IO modules.

plan to use IO for optimizing the inventory by managing safety stock (SS) with proper application of demand variability. Usin

em lead time and supplier lead time variability. Today I use static safety stock.

oday all products in general are targeted as same service level of 95%. I plan to segregate products

o different service levels from 95 to 90 %.

am in the testing stage and on my first system configuration I would like to understand the underlying

gic as to how the system is recommending SS level under specific parameters. When I use the ASCP plan alone I can relate

emand to supply. When I feed a static safety stock I know the number I targeted.

ried using MyOracleSupport.com notes and the user guide to analyze the scenarios below but I am at a loss to explain som

e behavior. In the initial few scenarios I could relate to the formula described in available notes but for the rest of the scen

cannot. Do we have a way to evaluate data as suggested by the ASCP/IO plan?

1. In the SS calculation formula, when calculating the Lead time I find the system uses 7 days where as I use a calendar wworking days. Forecast is set at weekly buckets. So how does the 7 days calculation effect my output. What will hapif I have a monthly bucket forecast or say a day bucket?

2. For changes in fulfillment Lead-time, purchase lead-time variability, budget constraint and supply constraint scenarioNeed to understand how the SS level is calculated.

nswers are after the test case scenarios.


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cenario One


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cenario 2


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cenario Three


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cenario Four


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cenario Five


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cenario Seven


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cenario Eight


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Answer

The length of the weekly bucket is onsidered as 7 days and that goes to denominator as shown in the

spreadsheet. The lead time of the 5 days is in the numerator:

The DFLT is just subtracted from the cumulative lead time. So the value of 5 they modeled will be

subtracted from the lead time to arrive at a smaller safety stock.

The supplier variability safety stock is calculated separately and then pooled into the demand variability

safety stock.

Supplier variability safety stock = K * sigma_LT * mean demand for a buy item where:

K = safety factor for the service level which is propagated down to the buy item

sigma_LT = supplier variability % * transit lead time

Overall safety stock = sqrt( supplier variability safety stock^2 + demand variability safety stock^2)

For the budget constraint plan, the allocation is based on solving a global linear program, so it

is not an item-by-item allocation which can be easily explained looking only at an item by itself.

But in general, the system compares the budget provided with the inventory value corresponding to

the target service level. For this, one can run an enforce service level plan with the same settings.

Then if the budget is deficit compared to the target inventory value, the system allocates safety stock

among various items in order of margin and probability of corresponding demand. If the budget is

surplus, the system ensures that at least the target safety stock is met for all items, and again,

allocated based on margin and probability of the demand

For enforce capacity constraints mode, the method used is again a global linear program which considers

all the capacity constraints defined in the system. The system ensures material and resource capacity

defined are honored, and tries to meet target safety stocks. It is possible that the system may not be

able to achieve target safety stocks or even satisfy the mean demand if the capacity is insufficient.

ascp io safety stock calc lead time

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