How to Use the Internet Based Reverse Dynamic Safety Stock Calculator

ByPrimary Researcher

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.

See our references for this article and related articles at this link.

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 the 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.

Reverse Safety Stock Calculator

This calculator will provide the service level depending upon the given the inputs provided by you.
Enter the following values
From Order to Arrival
There are two primary service level measurements in supply chain - on is fulfilled orders and the other is cases. The dynamic safety stock calculation - which this form uses is based upon the case fill rate.
This is the trickier set of of questions and the more difficult to obtain.
Can be calculated as standard deviation of forecast errors. The best way to get this value is to extract the forecast errors from the system into a spreadsheet and run the STDEV() fomula on the entire column.
Essentially a measurement of supply reliability. Often taken from the planned receipt date versus the actual receipt date from the ERP system. For aggregate analysis the average standard deviation can be taken for all products.
It is important to understand the four main calculated values that go into the final safety stock value.
This section will help students and practitioners understand the components that make up the safety stock calculation.
This is the relationship between the lead time and the forecast frequency.
This is a measure of the error or variability of the lead times in the system or another way to look a this is the lead time "forecast."
This is a measure of the error or variability of the forecast. This is what the dynamic safety stock calculator is best known for. However, its only one of the uses of the formula.
Simply the average demand squared.
Simply the average lead time squared.
This section will help students and practitioners understand the components that make up the safety stock calculation.
This calculates a value based upon the normal distribution, the left side of the distribution after the percentage selected. The portion to the right is uncovered by the safety stock.
This is the value that could be placed in the system. The alternative is to enable dynamic safety stock if the application supports it, which many applications now do. However, before you do that you can test the what the dynamic safety stock functionality will produce in this calculator.
This is the difference between the value you entered above and the calculated value based upon other input. If the value is negative increase the service level, if positive, decrease the service level. Adjust the service level until the differential in this field is close to zero. You will not normally be able to get to zero, the objective is just to get close. Choose the service level that moves this number closes to zero - regardless of whether it is positive or negative.

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