Great Video. I've been working on inventory analysis for years and never knew about the normsimv function. Have always used the VLookup function. This is so much easier. Extremely helpful, and thanks for the video.
There are two main formulas for calculating safety stock. The method I used in this video is used when demand is less certain, which I think is fair to assume. The equation you mentioned is the other main formula used. In the university I went to the formula I used was taught as more accurate. It was also the formula I used in my supply chain job.
Thanks a lot for the video! This is a really good explanation that helps me a lot. Could you advise if we observe demand on a weekly basis due to some unstable internal processes that don't allow us to do it daily, can I calculate STDEV week to week with the same formula or would this be incorrect? Much appreciated in advance!
How would you calculate safety stock after a downstream process in the same value stream? Would you calculate lead time from the beginning or from the previous safety stock?
I totally get the part where u multiply Zscore with standard dev. But i dont understand the logic why u have to multiply ot with square root of lead time? Can you explain it? Thank you so much
So there are two main formulas used when calculating safety stock. The more accurate in my opinion is the "kings method". This is the method shown in the video. This is used when demand is less certain, which I think is fair to assume on most occasions.
Please provide the formula for determining when to reorder the stock? I understood about the quantity below which order to be placed but how to calculate the number of days in which new order to be placed?
@@CalonHeindel I already watched that video but I am interested in knowing the number of days formula based on current stock for reordering purpose. In your video only quantity calculation is given
@@spat21 that all depends on your supplier. If you order materials and it takes on avg 5 days to get to you, then your number would be 5. It just depends how long that takes.
Thanks for the video. I was wondering why if our daily needs below 10 for example (Day 1 = 9, Day 2 = 8, Day 3 = 7, Day 4 = 10, and so on....), safety stock would be 7 with the lead time of 7 days. If the result of the safety stock is 7, isn't it too late to reorder at the point of the safety stock of 7? Thanks
Right so since your standard deviation is so small you don’t need as much safety stock. Generally you would order before you reached safety stock levels, so it wouldn’t be too late. You’d get new inventory before that. I have another video on Re-order point and economic order quantity, that would explain that for you.
Is the number in the formula formatted as a percentage? If you put your service level less than 50% it’ll be negative. You shouldn’t aim for a service level that low normally.
@@CalonHeindel thanks for the reply :) so what figure would I use for the LT if this is in weeks and an item has a 9 day LT? im looking at somthing thats square root of the PC/T and is confusing me
