Dynamic Safety Stock can be used to determine the Safety Stock level

The Dynamic Safety Stock is calculated by the formula

Dynamic Safety Stock = Average Daily Requirement * Range Of Coverage

The Range of Coverage Profile consists of the parameters which are maintained to
calculate the Dynamic Safety Stock. The parameters maintained are based on the
number of days for which the material availability is required. Here the number of
days is taken in the range of coverage for which the material must be available.
Subsequently based on this coverage profile system calculates requirements in MRP
Evaluations & creates the order proposals

1. Maintain the Range of coverage profile (T:code: OMIA)

Same coverage profile maintained in material master MRP2 view

Period Indicator: M (Month), Calendar Period to calculate the average requirement,

Number of Period: 3 ( 3 Period of Monthly requirement)

Type of Per Length = 3 (Standard Days), In this case you enter the the no of days per period, Here no of

days per Period is 20,

Type of Per length =1 (Workdays) consider the factory calendar
=2 (Calendar Days) Consider Total calendar days

No of period 3, and monthly requirement and divide by standard period of 20 days to derive the
average daily requirement

Range of Coverage profile with no of period 3 with target safety stock to cover 3 days.

Second Range of coverage profile target safety stock to cover 5 days, and this period consider as long as till
end of the demand

PIR created in system with help of the MD61

MD04 screen view before run MRP

MD04 screen view after run MRP

Dynamic safety stock Calculation

1. Requirement of three month, (Oct,Nov,Dec), Here system consider three month because of Period maintained in
coverage profile is 3

(40+100+120)/ (3 (Period) X 20 (Standard Days of each period)) = 4.33 Requirement/day

4.33 x 3 (Target days of first range of coverage profile) = 13 Qty (Period 1)
For first month requirement is 40+13 =53 Qty, system generate the Planned order for same qty

2. Now, for month(Nov, Dec, and Jan)

(100+120+60)/3X20 = 4.7 Requirement/day
4.7 X 3=15 (Period 2 )

3. Now for month (Dec, Jan and Feb)

(120+60+80)/3X20 = 4.3 Requirement/day

4.3X3= 13 (Period 3)

Note: Target days 3 consider three times because of no of period 3 maintained in first range of coverage
profile. After 3 period systems consider target days 5

4.

Now for Month (Jan, Feb)

(60+80)/3x20 = 2.33 Requirement/day
2.33*5 (Target days of second range of coverage profile) = 12 (Period 4)

5. Now for month (Feb)

80/3x20 = 1.33 Requirement/day
1.33*5 = 7 (Period 5)

Please refer below snap for detail information

I hope this document helpful to you understand the basic of Dynamic safety stock calculation

Request to expert review and suggest if any thing wrong and missing in this document