1. Using Supply Planning
  2. How Safety Stock is Calculated for Supply Plans That Use Telescoping Time Buckets

How Safety Stock is Calculated for Supply Plans That Use Telescoping Time Buckets

If you use days of cover for your safety stock calculation method, then the calculation method factors in the telescoping time buckets. If you don't use days of cover, then telescoping buckets has no impact on how safety stock is calculated.

For days of cover based safety stock calculations, the planning process prorates demand in the supply planning buckets based on the specified demand period.

Let's suppose you have an item with the safety stock planning method of Days of Cover. The Demand Period and Days of Cover values are set to 4 days. Additionally, the organization calendar has 7 working days.

calculate safety stock with telescoping buckets

Calculating Safety Stock for Day 1 (Daily Buckets)

Safety stock in the daily buckets sums the demands over the demand period. Next, that sum is divided by the demand period and multiplied by the days of cover.

In our example, the demand for Days 1 through 4 adds up to 70. This number is divided by 4 (demand period) and then multiplied by 4 (days of cover). So, the safety stock for Day 1 is 70.

Calculating Safety Stock for Day 5 (Daily and Weekly Buckets)

When the demand straddles the daily and weekly buckets, the demand in the weekly bucket is prorated.

In our example, Days 5 through 7 are daily buckets and Day 8 is in the weekly bucket. These steps show you how to calculate safety stock for Day 5.

  1. Add the demand for Days 5 through 7, which is 20 (5+5+10).

  2. The next portion of the time bucket is weekly, so to get the demand for Day 8, you must prorate the week. The prorated demand for Day 8 is 10 (1/7th of 70).

  3. Add the demand for the daily and prorated weekly buckets to determine the calculated safety stock for Day 5, which is 30 (20+10).

Calculating Safety Stock for Weekly Buckets

When the demand is in the weekly buckets, the safety stock is the prorated daily demand multiplied by the days of cover.

In our example, Week 2 demand is 90 units. The prorated daily demand is 12.85 (4/7th of 90) that you multiply by 4 (days of cover), which calculates to 51.4 for your safety stock for Day 9.