According to the stockholding strategy (SHS) assigned to a material, the P&I solution in DynaSys will calculate the SHS Replenishment Lead Time (RLT) = Longest path taking into account only MTO/PTO BOM levels - we consider the PTS/MTS as available so no need to take into account the lead time.
Warning: The SHS RLT for a given material (ex: the FP) does not depend on the SHS of same Material but of SHS of lower levels
Days Inventory In Hand = The conversion of monetary value of inventory to time.
What is Safety Stock ?
“A quantity of stock planned to be in inventory to protect against fluctuation in demand or supply”
The Safety Stock is calculated by a formula, then adjusted (divided) using a matrix based in Variability/Usage.
1) Calculation of Safety Stock with the following 3 steps according to the formula opposite.
2) Adjust (divide) previous SS results by a number depending on its Usage & Variability:
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What is Cycle Stock ?
“Cycle stock is the average amount of inventory held due to the periodic replenishment of inventory”
- Cycle stock inventory, is the portion of inventory available to meet normal demand during a given period. For FG this period refers to the Replenishment Lead Time and for FG refers to the Procurement Lead Time
- It is one of the more important portions of inventory because it is the amount of inventory needed to meet customer needs. The cycle stock inventory is the first place a customer’s order will be fulfilled from.
- Some sites may have other contributors to target stock – such as in process stock. For example, you may have a tank which at a certain level of stock – the material can not be pumped out or stock which is in the process before it is physically consumed.
- Target stock is a guideline. There are times when raw materials have just come in or FG just produced so stock will be SS + full cycle stock and other times when the stock is low – waiting for the raw material arrival or finished goods production to complete. So there is a range that you should understand and work to maintain.
- How often should I review target stocks? At minimum annually or if a material change occurs in your supply chai