Target Stock Level concept ..(purpose?)
Hello Gurus -
Can somebody please help me in understanding the purpose of maintaining a target stock level?
1) If my goal is to maintain certain amount of inventory at all times as buffer against uncertainities, why can I not just maintain a safety stock?
2) when I am using SZ safety stock with safety days supply as 4 days and I have a demand on day 2 and 4 as 1000 each, my safety stock planned value is 2000( which is the total demand). IF I use a target stock level method using target days supply, the target stock level is also the same qty of 2000. Then what is the difference?
So, why can I not just maintain a time dependent safety stock SZ(based on safety days supply which has forecast/other demand as an input).
4) are there some limitations with Safety stock methods which forces us to use target stock methods?
I know this is not a pinpointed question, but if somebody can throw some light on concept of target stock level methods I would appreciate it a lot!
Srinivas krishnamoorthy replied
In my view Target Stock levels are essentially inventory aims. These inventory aims thus is a sum total of safety stock and general stock to meet forecast demands. Remember that in APO Target Stock Level key figures are essentially macro calculated. This macro calculated key figure is then consequently used by Heuristics or PPDS to come up with quantity for replenishment. Also note that Safety stock is different and is respected/kept intact until the system needs to dip into it. Maybe someone can confirm this, but based on my understanding if you are running Adv Safety Stock Method using /sapapo/MSDP_SB you do need a target stock level method defined.