IBP Inventory

[Former Member]

Hi,

I have 2 queries. Plz help.

1st Query -

I have run the inventory optimizers and system generated the safety stock values. However the safety stock values change when run in different weeks on keeping the other inputs same. e.g. I ran multi-stage inventory optimization last week and this week keeping the same configuration but I got different values of safety stock for the same periods. Used the rolling planning horizon. Attached are the screenshots. So want to understand the logic.

Last week - Safety stock was there from W2-2016 onwards. Lets take W4-2016 for comparison, safety stock is 93.

Current Week - Safety stock is from W3- 2016 onwards. For w4-2016, safety stock is 99.

2nd Query -

In the same planning area, I changed the values of IO forecast error CV, which is one of the inputs, for the entire planning period for the simulation purpose. When I ran the simulation, value of input - IO Forecast error CV in only 3 periods changed after the simulation updated the values and other periods restored their earlier values. Is it due to some settings?

Regards,

Shwetank

[former_member185660 · Accepted solution]

Shwetank,

For 1st Query, your propagated demand declines over time so the recommended safety recommendations are aligned to such.  Does your demand forecast change over time?

Foe 2nd Query, it is a setting for a variable such as Forecast Error CV to only change for the first period.

Alexis

[Former Member · Accepted solution]

Hi Alexis,

Thanks for your reply.

For the 1st point, yes my demand forecast changes over time. This is the screenshot of my IO forecast.

For the 2nd point, It changed only for the first 3 periods. So I can assume that it is a setting and I can change that.

Regards,

Shwetank

[former_member185660 · Accepted solution]

The demand forecast quantity is a mina input drivers of safety stock recommendations with a positive correlation.  In this case, declining recommended safety stock values are in line with the declining demand forecast.

As for 2nd point, it is a setting.

Alexis

[Former Member · Accepted solution]

Hi Alexis,

Thank you for the reply.

I agree that the ecommended safety stock values should be in line with the declining demand forecast.

Howver the safety stock values for the same time period say week 4 is different when checked last week and this week.

As per my understanding safety stock value should remain the same irrespective of when I view them.

Please guide.

Regards,

Prabha

[former_member185660 · Accepted solution]

Hi Prabha,

If nothing changed, the value should remain the same.

Did you run the batch mode multi-stage optimization this week?

How much was the change in %?

Alexis

[Former Member · Accepted solution]

Hi Alexis,

Sorry for the late reply.

Yes we ran the Multi stage optimisation this week.

You can see the values for Recommended Safety Stock has changed in the screenhsots above

for eg. for Week 4 previously SS was 93 now it is 99. There is an increase of 6.5%

Can you please explain this change?

Thanks

Prabha

[former_member185660 · Accepted solution]

Prabha,

If nothing else changed, lead time and PBR influence Safety Stock Recommendations week to week as these two variables determine exposure periods. Also, I notice the propagated demand starts increasing for the coming week so it does have an influence on safety stock.

I recommend reviewing the IBP for inventory fundamentals documentation available in our JAM site.  This document provides details how input variables influence safety stock.

Alexis

[Former Member · Accepted solution]

Hi Alexis,

I am a bit new to the IBP Inventory. After  exploring the various fundamentals of Inventory I ran multi-stage inventory optimization taking all the necessary inputs. System has generated recommended safety stock and Target Inventory Position as two main outputs.

So could you please tell me how these two (Recommended Safety stock and Target Inventory position) have been calculated? May I know the mathematical calculation behind these.

Thanks,

Pranay

[former_member185660 · Accepted solution]

Hi Pranay,

The mathemtical calculation is proprietary to SAP.  Please review the posting below summarizing content behind IBP for inventory outputs.

Regards,

Alexis Lozada