Month Sales Delivery Lead Time (Day)

jan 900 1 38
feb 1,000 2 37
mar 800 3 38
apr 1,100 4 40
may 900 5 33
june 1,200 6 28
july 900 7 37
aug 1,100 8 36
sept 1,100 9 36
oct 1,000 10 27
nov 800 Average Lead Time 35
dec 1,200 MAX Lead Time 40
TOTAL 12,000
Average / Month 1,000
Average / Day 32.9
Sale MAX 39.5
METHOD 2
Safety Stock = (Max Lead Time * Max Sale) - (Average Lead Time *
Reorder Point = SS + average sale (or forecast) * Average Lead Time

Limits A delay or an extreme sale can have a significan

No consideration of the target service rate
Tips Capping deadlines / max sales
 Sales Lead Time
1,400 45

1,200 40
35
1,000
30
800 25
600 20
15
400
10
200
5
- 0
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9

METHOD 2
* Max Sale) - (Average Lead Time * Average Sale) 427
le (or forecast) * Average Lead Time 1,578

n extreme sale can have a significant impact on the calculation

ration of the target service rate
adlines / max sales
Lead Time

4 5 6 7 8 9 10
 Month Sales
jan 900
feb 1,000
mar 800
apr 1,100
may 900
june 1,200
july 900
aug 1,100
sept 1,100
oct 1,000
nov 800
dec 1,200
TOTAL 12,000
Average / Month 1,000
Average / Day 32.9
Targeted Service Rate 90%
Z = Coefficient service 1.28
Demand Standard Deviation 141.4

Recommended
METHOD 3
Uncertainty only on demand
Z *Demand Standard Deviation* sqrt (Average LT)
Safety Stock Formula
=1,28 x 141,4 x sqrt(1,15)
Safety Stock 194
Reorder Point 1,345

Normal Distribution
Service Rate Z =Coeff service
99.9% 3.09
99% 2.33
98% 2.05
97% 1.88
96% 1.75
95% 1.64
94% 1.55
93% 1.48
92% 1.41
91% 1.34
90% 1.28
89% 1.23
88% 1.17
87% 1.13
86% 1.08
85% 1.04
84% 0.99
83% 0.95
82% 0.92
81% 0.88
80% 0.84
79% 0.81
78% 0.77
77% 0.74
76% 0.71
75% 0.67
74% 0.64
73% 0.61
72% 0.58
71% 0.55
70% 0.52
69% 0.50
68% 0.47
67% 0.44
66% 0.41
65% 0.39
64% 0.36
63% 0.33
62% 0.31
61% 0.28
60% 0.25
59% 0.23
58% 0.20
57% 0.18
56% 0.15
55% 0.13
54% 0.10
53% 0.08
52% 0.05
51% 0.03
50% 0.00
49% -0.03
48% -0.05
47% -0.08
46% -0.10
45% -0.13
44% -0.15
43% -0.18
42% -0.20
41% -0.23
40% -0.25
39% -0.28
38% -0.31
37% -0.33
36% -0.36
35% -0.39
34% -0.41
33% -0.44
32% -0.47
31% -0.50
30% -0.52
29% -0.55
28% -0.58
27% -0.61
26% -0.64
25% -0.67
24% -0.71
23% -0.74
22% -0.77
21% -0.81
20% -0.84
19% -0.88
18% -0.92
17% -0.95
16% -0.99
15% -1.04
14% -1.08
13% -1.13
12% -1.17
11% -1.23
10% -1.28
9% -1.34
8% -1.41
7% -1.48
6% -1.55
5% -1.64
4% -1.75
3% -1.88
2% -2.05
1% -2.33
0% -3.09
 Delivery Lead time (Days) Lead time (Month)
1 38 1.2
2 37 1.2
3 38 1.2
"Be careful, unlike our video on safety stock, it
4 40 1.3 important to use the average time in months
5 33 1.1 and not in number of days because we use th
6 28 0.9 standard deviation of sales per month.
You have 3 options: Either you use all your dat
7 37 1.2 in DAY, WEEK or MONTH. It is essential to alwa
8 36 1.2 remain constant with the units of time in you
9 36 1.2 calculations."
10 27 0.9
Average Lead Time 35 1.15
Max Lead Time 40 1.31
Lead Time Standard Deviatio 4.35 0.14

*You can replace average sale by future foreca

on the average time if your forecasts are reliab

Recommended
METHOD 4 METHOD 5
Uncertainty only on Lead Time Uncertainty on demand and Lead Time indepen
Z * Average Sale * Lead Time Standard Deviation Z * sqrt( (Average LT * (Demand Standard
Deviation)² + (Average Sale *Lead Time
=1,28 x 1000 * 0,14 Standard Deviation)²)
183 267
1,333 1,417
ke our video on safety stock, it is
se the average time in months
ber of days because we use the
eviation of sales per month.
ons: Either you use all your data
MONTH. It is essential to always
nt with the units of time in your
alculations."

e average sale by future forecast

time if your forecasts are reliable

Recommended
METHOD 5 METHOD 6
emand and Lead Time independent Uncertainty on demand and Lead Time dependent
erage LT * (Demand Standard Z * Demand Standard Deviation * Sqrt (Average
+ (Average Sale *Lead Time LT) + Z * Average Sale * Lead Time Standard
ndard Deviation)²) Deviation
267 377
1,417 1,527
 DISCOVER THE ABC XYZ A

Discover this unknown SCM Best Practice optimize your inventory

- The ABC Analysis is not sufficient to optimize your inventory
- Classify your product based on uncertainty & volatility
- Optimize your safety stock with the ABC XYZ classification
- Business example in Excel with 2000 products & Safety Stock
- Download ABC XYZ Excel with 3 methodologies

https://abcsupplychain.com/en/cour

BECOME INVENTORY MANAGE

My complet program
- 45 steps to optimize your inventory management
- All the theory applied to a concrete business case
- How this company reduced its inventory by 21% in 6 months
- Excel templates & 202 Checklist downloadable
- Private Coaching & Mentoring to achieve your goals
 https://abcsupplychain.com/en/invento

OTHER RESSOURC

ALL MY COURSES
https://abcsupplychain.com/en/courses-supply-chain-logistics/

EXCELS & TOOLS

https://abcsupplychain.com/en/tools-excel/

CONSULTING & MENTORING

https://abcsupplychain.com/en/consulting/

See you soon,

Edouard Thieuleux - Founder of A
ER THE ABC XYZ ANALYSIS

r inventory

chain.com/en/course-abc-xyz-analyse/

ENTORY MANAGEMENT EXPERT

ain.com/en/inventory-management-course/

OTHER RESSOURCES

See you soon,

uleux - Founder of AbcSupplyChain