Days supply

[Former Member]

Hi Experts,

Can you please explain the logic used for calculation of Days Supply Key figure in SNP, preferrably with an example? Also, does it work well with daily buckets in SNP?

Regards,

PN

[marianoc · Accepted solution]

Hi PN,

Let me explain this with one example:

	Initial	Day 01	Day 02	Day 03	Day 04	Day 05	Day 06	Day 07	Day 08	Day 09	Day 10	Day 11	Day 12
Total Demand		1000	1000	1000	1000	2000	2000	2000	2000	2000	2000	1500	1500
Total Receipts	10000			2000	2000	2000	1500	1500
Projected   Stock	10000	9000	8000	9000	10000	10000	9500	9000	7000
Actual Days'   Supply		6	5	5	5	5	5	5	5
Target Days'   Supply		5	5	5	5	5	5	5	5	5	5	5	5

We can say that APO will plan the replenishment orders considering the Target Day's supply. Suppose that you want to have always 5 days of coverage.

Let see what happens each days:

Day 01:

You will end with 9000 CS (your initial stock is 10000 CS and you expect sales for 1000CS). If at the end of day 1 you have 9000 CS you know that you have enough inventory for the following 6 days:

- Total Demand Day 02: 1000 CS

- Total Demand Day 03: 1000 CS

- Total Demand Day 04: 1000 CS

- Total Demand Day 05: 2000 CS

- Total Demand Day 06: 2000 CS

- Total Demand Day 07: 2000 CS

---> Total 9000 CS. So if you don´t have more receiption, you know that with 9000 CS you can cover 6 days, which is ok, because your target is 5 days.

Day 02:

You will end with 8000 CS (your initial stock is 9000 CS and you expect sales for 1000CS). If at the end of day 2 you have 8000 CS you know that you have enough inventory for the following 5 days:

- Total Demand Day 03: 1000 CS

- Total Demand Day 04: 1000 CS

- Total Demand Day 05: 2000 CS

- Total Demand Day 06: 2000 CS

- Total Demand Day 07: 2000 CS

---> Total 8000 CS. So if you don´t have more receiption, you know that with 8000 CS you can cover 5 days, which is ok, because your target is 5 days.

Day 03:

If you don't have receiption, you will end with 7000 CS (your initial stock is 8000 CS and you expect sales for 1000CS). If at the end of day 3 you have 7000 CS you know that you have enough inventory for the following 4 days:

- Total Demand Day 04: 1000 CS

- Total Demand Day 05: 2000 CS

- Total Demand Day 06: 2000 CS

- Total Demand Day 07: 2000 CS

- Total Demand Day 08: 2000 CS

---> In only 4 days you have Demand for 7000 CS. So if you don´t have more receiptions, you know that with 7000 CS you can cover only 4 days, which is NOT ok, because your target is 5 days. This is why APO will plan receiptions for 2000 CS..

And this is the logic for every days...

Thansk and Regards,

Mariano

[Former Member · Accepted solution]

Thanks Mariano for this nice explanation..could you please also explain by taking the reorder point into account with one example..

[marianoc · Accepted solution]

Hi PN,

The Reorder Ponint does not used the Days' Supply.

When you use Days' Supply you are planning based on Demand (forecast + sales), Inventories and Safety Stock Policies.

When you use Reorder Point, you don't use forecast to trigger your replenishment. The planning is based on the inventory levels, lead times & safety stock.

Thansk and Regards,

Mariano

[Former Member · Accepted solution]

Hello Mariano,

what happens when say we have 2different scenarios with safety stock types.

Scnrio 1. Static Safety stock - SB - 1000 units every day

Scnrio 2. Dynamic safety stock - MB - 1000 units on Day 3 & Day 5.

Best Regards,

Sharath

[marianoc · Accepted solution]

Hi Sharath,

When you use SB, your Target Days' Supply (if your coverage is in Days) or Safet Stock (if you coverage is a fixed quantity)  are Not period-based. This means that the value is always the same. E.g.: in my example I always used 5 days as Target Days' Supply. In this case APO reads the data from MAT1.

Now you can maintein Target Days´ Supply or Safety Stock variable depending on the period. In this case, you will need to load different Target Days' Supply or Safety Stocks manually. In this case you will do this direclty in the Planning Book (SNP94).

Thanks and Regards,

Mariano

[Former Member · Accepted solution]

Hello Mariano,

Does that means say, assume we are using not using target day's supply and using only safety stock.

Scenario 1: SB: on Day 2 we have a Demand of 1000 and safety stock(SB) of 1500, since there is a shortage of 500 for that day, the system creates a receipt of 500 on that day..and so on for the particular day's situation.

Scenario 2: MB: same example on Day 2 there will be a receipt of 500 and employs same logic for the rest of the buckets where there is a time dependent safety stock.

Please clarify.

Best Regards,

Sharath

[marianoc · Accepted solution]

Hi Sharath,

In your scenarios you did not mention what was the Stock Level at the end of Day 1. I will assume the stock level at the end of Day 1 is 1000.

So if the initial stock for your scenarios is 1000, then you are right. The system will create receipts for 500 on Day 2 for scenario 1 and will apply a similar logic for scenario 2, but considering time dependent safety stocks.

Thanks and Regards,

Mariano

[Former Member · Accepted solution]

Hello Mariano,

Sorry for that(written that in a hurry). as explained exactly by you I thought of a no stock situation at the end of Day 1 and a Demand of 1000 on Day 2.

Nevertheless, Thank you for the above explanations. I rated it with a 5 Star

Best Regards,

Sharath

[Former Member · Accepted solution]

Hello Mariano,

I modified the above example with the safety stock SB & MB, can you please check the attached JPEG image.

Best Regards,

Sharath

[marianoc · Accepted solution]

Hi Sharath,

You had a couple of errors...

See this graph.. I have marked the differences in yellow.

Kind Regards,

Mariano

[Former Member · Accepted solution]

Thank you Mariano for correcting..

Best Regards,

Sharath

[marianoc]

Hi PN,

Is your questions solved?

If yes, please select the correct answer.

Thanks and Regards,

Mariano