How to Calculate Safety Stocks for Seasonal Products

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1、HOWTOCALCULATESAFETYSTOCKSFORHIGHLYSEASONALPRODUCTSByRichardHerrinProposesanewmethodforcom-methods.ThesemethodsappeartoworkSTANDARDAPICS’putingsafetystockparticularlyforwellforsituationswheredemandisMETHODproductswhicharehighlyseason-stable,butnotforsituationswhereal…theproposedmethodnotonlydemandi

2、sseasonal.TheobjectiveofthisThestandardmethodforcalculatingarticleistopointoutwherethestandardsafetystockusestargetedcustomerreducesaverageholdingofinven-methodfailsandproposeanalternateservicelevelandcumulativeforecasttorybutalsohelpstomeetthetar-methodforcalculatingsafetystockforerroroverthemostr

3、ecenthistoricalgetcustomerservicelevel…mostseasonalproducts.periodstodeterminetheminimumERPsystemsusethestandardamountofsafetystockneededtocovermethod,whichisrecommendedbysalesuntilthenextscheduledre-supply,APICS.whichiscomputedasfollows(Table1):Step1:Computeforecastdeviationhekeyobjectiveofstatist

4、ical(forecasterror)foreachmonth,thatis,Tforecastinginademanddrivenhowforecastdeviatesfromtheactual.supplynetworkistoidentifythe(Column4,Table1)probablerangeofexpecteddemandsoStep2:Squareeachdeviation.(Column5,thatsupplycancoverdemandanywhereTable1)withinthestatisticalrange.SupplycanStep3:Computesta

5、ndarddeviationusingcovertherangeeitherthroughhavingtheEquation(2)capacitytoreplenishwithinleadtimesorStep4:Computesafetystockusingbycarryingexcessinventory(safetyEquation(1)stock).Inanorganizationwheremarket-ingistaskedwithgrowingthemarket,andAssumingthattheerrorisnormallysupplyistaskedwithreducing

6、workingdistributed,thesafetystockiscalculatedcapital,thedecisionontheamountofasfollows:safetystocktocarrycanbecomeverycontentious.MostoftheargumentsstemRICHARDHERRIN2SS=Z´LT´sfromdisagreementonthemethodsusedto…(1)determinetherequiredsafetystock.Mr.HerrinworksforSyngenta’sWhere:NAFTAregion(USA,Canad

7、aandTotalsafetystockistheamountofMexico)whereheisresponsibleforSS=Safetystockmaterialneededtocompensateforsupplyimplementingbestpracticesinfore-Z=Valuebasedoncustomerserviceanddemandinefficiencies.Thisartic