Safety Stock is the level of days of extra stock of inventory that is maintained to avoid a stock out. The safety stock calculation can be seen for each product in K3S on the Product Details screen or Product History screen.
If you click the Safety Stock Analyzer, you will see the twelve different calculations in four different categories for a product’s safety stock.
- Product Average: Each product will have a weekly, 13 four-weekly, or monthly average.
- Periodicity: Refers to the products average calculation. A product can have a weekly (52), 13 by four-weekly (13), or monthly average (12).
- Deviation: Refers to how the products history data points vary from the average. It can also be seen as the stability of the product. For example, if a product has a very low deviation (10% or lower), it is considered stable and easier to predict. A product that has a large deviation (25% or higher), it is considered unstable and difficult to predict. The stability level has a large effect on safety stock. If we can predict the product easier, we can afford to lower safety stock.
- Buy Multiple: Increment of units used when buying the product.
- Minimum Order: If there is a minimum, it will be considered when calculating safety stock.
- Service Level: The target fill rate for the product based on its ranking in your service level settings.
- Carry Rate: The percentage cost of carrying the product. IT can be found by taking your total annual costs (Warehouse space + Taxes + Insurance + Obsolescence and Shrinkage + Material Handling + Cost of Money Invested) and divide by your Average Inventory Value.
- Line Cost: Reflects how much it cost per line item on a purchase order.
- Cost Each: The cost for an each of the product.
- Order Cycle: The number of days between orders.
- Product Lead Time: The number of days on average it will take to receive the order.
- Product Lead Time Variance: The percentage the actual lead times varies from the average lead time.
Article last revised on March 27, 2018