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1. What is the average demand for some time period into the future. 2. How many of those average days demand do you want in safety stock.Thus when the customer demand dries up for the season, the safety stock goes down to almost nothing, then as the season approaches again, the safety stock also picks up. This way if you have different seasons for different customers, you not storing safety stock for the wrong seasons.
Daniel, Good answer, but I believe the saying is "Don't forecast what you can calculate", The one other point I would make to pd is to be aware of inserting multiple variables to your MRP logic. By that I mean if you are planning requirements for end items (finished goods) in LOT QUANTITIES (Order Policy code H, I, J), you have already affected your inventory levels at replenishment to be greater than zero if your customers are not required to order full lot quantities. To add a minimum balance variable on top of that, you can further distort both the timing and the replenishment balances (Minimum balance of 1000, lot quantity of 2500, as soon as the projected balance is 999 or less, a planned order for 2500 will be created by BPCS. If you have no further movement on this item before the replenishment order is received, you could conceivably have 3499 in stock. Remember that you have over-planned all components to support that level of inventory, and the timing of their re-order. This could have a dramatic affect on cash flow and inventory cost/turns.) As another saying goes, "do all things in moderation". Frederick C. Davy, CPIM, PMP Business Systems Analyst Interface Solution, Inc. Phone: (315) 592-8101 Fax: (315) 592-8481 e-mail: fcdavy@xxxxxxxxxxxx "Daniel Warthold" <daniel.warthold@xxxxxxxxxxxx> Sent by: bpcs-l-bounces+fcdavy=sealinfo.com@xxxxxxxxxxxx 10/27/2005 09:56 AM Please respond to "SSA's BPCS ERP System" <bpcs-l@xxxxxxxxxxxx> To "SSA's BPCS ERP System" <bpcs-l@xxxxxxxxxxxx> cc Subject Re: [BPCS-L] Minimum balance for children Good answer Al. I'd like to add, there is a principle in materials management that reads "do not guess what you can calculate", (or something like that). This means put the safety stock where you have uncertainty of the demand, (on the finished item in this case), and let MRP calculate the requirements on the components. If you also had uncertainty on the components, like if they were also sold as spare parts, then you might want to cover this uncertainty with additionnal safety stocks on these components as well. Daniel Warthold P. eng CPIM ----- Original Message ----- From: "Al Mac" <macwheel99@xxxxxxxxxxx> To: "SSA's BPCS ERP System" <bpcs-l@xxxxxxxxxxxx> Sent: Thursday, October 27, 2005 5:13 AM Subject: Re: [BPCS-L] Minimum balance for children > Minimum balance on a parent does not cause any components to also have > minimum balance. All it causes is for MRP to tell you to make to fill the > minimum balance, like it is a special kind of order. > > Fact that you have a minimum balance on the parent means the MRP tells you > to make or order enough stuff to fill that minimum balance, plus any other > requirements. If you do as MRP says, you will end up with on-hand for the > parent item equal to the minimum balance, and zero on all the children, > because you met the requirements. > > We have minimum balance on end customer items where they can order from us > with very short lead time. So customer orders, we ship them out of the > safety stock, then manufacture to replenish it. > > We have minimum balance on some raw materials that are in heavy demand. > > We have considered minimum balance for the output from factory bottlenecks, > and where high setup involved. > > > Hi, Can anybody tell whether it is required to maintain Minimum Balance > > for children when it is maintained for End Item (Master Scheduled) ? > > Because, child are already taken care through this topmost parent's min. > > balance. regards, Prashanth > > > -- > This is the SSA's BPCS ERP System (BPCS-L) mailing list > To post a message email: BPCS-L@xxxxxxxxxxxx > To subscribe, unsubscribe, or change list options, > visit: http://lists.midrange.com/mailman/listinfo/bpcs-l > or email: BPCS-L-request@xxxxxxxxxxxx > Before posting, please take a moment to review the archives > at http://archive.midrange.com/bpcs-l. > > Delivered-To: daniel.warthold@xxxxxxxxxxxx -- This is the SSA's BPCS ERP System (BPCS-L) mailing list To post a message email: BPCS-L@xxxxxxxxxxxx To subscribe, unsubscribe, or change list options, visit: http://lists.midrange.com/mailman/listinfo/bpcs-l or email: BPCS-L-request@xxxxxxxxxxxx Before posting, please take a moment to review the archives at http://archive.midrange.com/bpcs-l. Delivered-To: fcdavy@xxxxxxxxxxxx -- This is the SSA's BPCS ERP System (BPCS-L) mailing list To post a message email: BPCS-L@xxxxxxxxxxxx To subscribe, unsubscribe, or change list options, visit: http://lists.midrange.com/mailman/listinfo/bpcs-l or email: BPCS-L-request@xxxxxxxxxxxx Before posting, please take a moment to review the archives at http://archive.midrange.com/bpcs-l. Delivered-To: macwheel99@xxxxxxxxxxx
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