Short & sweet: Safety stock and basic requirements

The basic requirement corresponds to the forecast average requirement per time unit, e.g. per month. The task of the safety stock is to absorb deviations between the forecast basic requirement and actual consumption, such as those resulting from excess consumption, delivery delays or under-delivery. The safety stock thus serves to ensure the level of delivery readiness. The amount of safety stock depends on the predictability of an item requirement.

Our tip: Most ERP systems use mathematical methods that require a so-called normal distribution (Gaussian distribution) of demand to forecast basic requirements and determine safety stock. However, this is only the case for a small percentage of items. Basic requirements and safety stocks are systematically miscalculated in this way, which can lead to stock errors of up to 40%.

If you are interested, we will be happy to analyze whether your basic requirements and safety stock are ideally matched. Just give us a call.

Prof. Dr. Andreas Kemmner

Prof. Dr. Andreas Kemmner

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