Dynamic Safety stock:

The dynamic safety stock is calculated in the planning run of the order proposal quantity. In the MRP evaluation, MD04 - you can check the parameters used to calculate the dynamic safety stock in the period totals display.To set the dynamic safety stock themaster data settingsrequired are, 1. Maintain MRP view. 2. In MRP 2 view enter the coverage profile which in configuration will carry the elements required as detailed below. 3. Material master- you have MRP type PD.It is maintained in SPRO under the node-> SPRO -Production-Material Requirements PlanningPlanning-MRP CalculationDefine Range of Coverage Profile (Dynamic Safety Stock). It is maintained with respect to a plant as the calculation is plant specific.CalculationThedynamic safety stockis calculated using the following formula: average daily requirements * range of coverage The individual parameters are described below:

Average daily requirements The calculation of the average daily requirements is carried out using the following formula: requirements in the specified periods/number of days in the total period lengthYou must maintain the following parameters for the calculation of the average daily requirements: 1. Period indicator You use this indicator to determine the calendar period for which you want to carry out the average daily requirements. Here you can enter the following:

weeks (W) months (M) periods according to the planned calendar (K) 2. Type of period length -You use this indicator to determine the length of the individual periods in detail. Here you can enter the following:

workdays calendar days standard days- if you select standard days as a period length, you must determine the number of days per period in the field, "No. standard days" If you set standard days as the period length, you must enter the number of days per period in the "NO. standard days" field. 3. Number of periods Here, you define the number of periods you use to calculate the average daily requirements. Determining the range of coverage You can determine the range of coverage for a maximum of three periods and you can maintain different coverage for each period. To do this, you must define the ranges of coverage and the periods in the screen section entitled, "Determine range of coverage". You also have the option of limiting the range of coverage in each of the three periods by entering a minimum and a maximum range of coverage. The system checks whether the

actual range of coverage ( available quantity / average daily requirements) lies below the minimum range of coverage or above the maximum range of coverage. If this is the case, the dynamic safety stock level is recalculated using the information for the target range of coverage. Example - 1 Coverage profile - 001, with following settings assign in material master - MRP2 view,Period type = M
No of period =2 Type of length = 3 and days/period = 20. Range of coverage for first period (target) = 3, no of periods= 2 Lets us say requirements areas below 12.11.2007 - 1000 19.11.2007 - 2000No of days = 2*20 = 40 average Daily requirement = (1000+2000)/40 = 3000/40 = 750 Safety stock requirement = 750*3(target) = 225.Run MRP, result is as below 12.11.2007 - pl order qty- 1225 available qty - 1225 12.11.2007 - VSF 1000- available qty - 225 19.11.2007 - pl order qty - 2000 balance - 2225 19.11.2007 - VSF 2000- available qty - 225. Example - 2 Coverage profile - 002, withfollowing settings, assign in material master - MRP2 view Period = M No of period = 1 Type period= 1 i.e. working days as per factory calendar, please check your factory calendar. it is taking form no of days of factory calendar, remove the days which already passed, then remove holidays. Example - In factory calendar 2,3,9,10,16,17,23,24,30 are holiday.i,e 9 days in 30 days are holidays, First, today is le us say 8th, hence from 30 days remove 7 days, ( as it is already passed), hence left with 23 days. Holidays applicable are, 9,10,16,17,23,24,30 i.e. 7 days i.e. from 23 days I need to remove 7 days hence the working days are only 16 days. range of coverage = target 7, no of period = 1. now my requirement is 3000 in that month daily average consumption is 3000/16 = 187.5 safety stock = 187.5*7 = 1313. 12.11.2007 - pl order - 1 qty 2313 available qty - 2313 12.11.2007 - VSF 1000- available qty - 1313 19.11.2007 - pl order - 2000 available qty - 3313 19.11.2007 - VSF 2000- available qty - 1313. I hope the above 2 examples clears the concept of dynamic safety stock calculation. PARAMETERS FOR AVERAGE DAILY REQUIREMENTS CALCULATION: Choose the period indicator as Month, Period, or Week. Specify the number of periods. This is used by system to calculate the average daily requirements. Select the "Type of Period Length", ie. as workdays or calendar days or standard days (days per period). If the type of period length is selected as standard days, they you have to specify the "days per period". Using these three parameters, the system calculates average daily requirements using

the formula: average daily requirements = Sum of requirements in the number of periods / number of days in the number of periods.
PARAMETERS FOR TARGET STOCK AS DAY'S OF SUPPLY

Then you have to specify how many workdays of supply you want to maintain as target stock, in your case 15 workdays. If you wanted to maintain a constant 15 days of supply as inventory through out the planning horizon, just specify the target stock as 15 days and leave rest of the fields as blank, i.e min, max, and number of periods. The number of periods in this section simply maintains the target stock for that many periods from the date of MRP run. This way you can tell the system to maintain different target stock levels for three different period intervals. For example, if you wanted to maintain 15 days stock for first 3 periods, then specify the target stock as 15 days and number of periods corresponding to it as 3. The system then will maintain 15 days supply as inventory for first 3 periods from the date of MRP run and subsequent months zero inventory will be maintained. This will allow you to maintain your 15 days supply constantly for 3 periods.

SAP MRP Calculation and Configuration of Dynamic Safety Stock (Range of coverage Profile) The Range of coverage profile is configured for the use of Dynamic safety stock for a given material. The range of coverage configuration contains the parameters for the calculation of the dynamic safety stock. The dynamic safety stock is a stock calculated based on the average daily requirements for a period rather than the actual requirements over the period, therefore it is more statistical value rather than an absolute value. Safety stock as we know is used to cover the fluctuations in the requirements, so is the dynamic safety stock, the only difference being, the safety stock is an absolute value provided directly for a material whereas the dynamic safety stock is calculated by the system on the basis of the coverage period and average daily stock calculated internally by the system. The Dynamic safety stock is calculated in every planning run. The transaction path is: SAP Customizing Implementation Guide > Production > Material Requirements Planning > Planning > MRP Calculations > Define Range of Coverage Profile (Dynamic Safety Stock) Range of coverage Configuration:

Fig MRP - Config 12

Configuration for calculation of average daily requirement for a period

Period indicator - Indicate the type of period, whether week or month or according to PP planning calendar. (Lets say it is W Week) Number of Periods Number of periods used to calculate the average daily requirements (Lets say it is 13 Weeks) Type of Period length It defines the number of days in the period, if the period length is in terms of workdays, then the factory calendar work days are considered, if the period length is in terms of calendar days then it is considered in terms of Gregorian calendar, and if it is terms of standard days, then you would have to enter the number of days in a period in the configuration (Lets say that the configuration was done with workdays and the factory calendar has 7 days per week) Therefore Average daily requirement = = Requirements in the period (Requirements in 13 Weeks Lets say 910 Units) / (Number of Periods Lets say 13 Weeks) * (Number of days in the period Lets say 7 days) = 910 / (13*7) = 10 Units Configuration parameters for calculation of Dynamic Safety Stock for the Range of Coverage You can define 3 different range of coverage minimum, maximum, and target range of coverage, which is used to calculate 3 different stocks using the average daily requirements (range of coverage multiplied by the period length). The Target range of coverage defined here would be used to calculate the Dynamic Safety Stock for the period of the coverage. The Period of the coverage is specified in the configuration. The coverages and the periods for which they should work for, are defined for 2 separate period lengths and the 3rd period length is for the rest of horizon. In the example, we have defined the safety stock to cover a period of 7 days (minimum, target and the maximum range of coverage). The minimum, target and the maximum stock is calculated for the average daily requirement over the respective coverage periods. You can check the minimum, maximum, target stock levels, minimum range of coverage, maximum range of coverage, target range of coverage in the MRP List or Stock requirements lists Period Total Display Section. As per our example, for the first period of 13 weeks, all the 3 stocks levels minimum, maximum, and target stock levels would be 70 Units and for the next period of 26 weeks it will be 70 units as well and for the rest of the horizon it will be 70 units again. Normally when the available stock falls below the minimum stock level, SAP planning run, would immediately create planned orders to suffice at least the target stock level. For example if the minimum stock level is 30 and the maximum is 80 and the target stock is 50 units, then if the available stocks fall below the 30 units mark, SAP creates a procurement proposal for 50 units to reach back to the target stock level. Whereas in the example below, all the 3 stocks types are 70 units, therefore when the stocks fall below the 70 units, the system will try to raise a procurement proposal to reach back to 70 units. As per our example in the configuration screen shot
Dynamic safety stock Dynamic safety Dynamic safety Dynamic safety formula summarized stocks for the 1st stocks for the 2nd stocks for the rest as = Average Daily period of 13 weeks period of 26 weeks of the Horizon Stock * Range of

coverage Minimum safety 70 Units stock Target safety stock 70 Units Maximum safety 70 Units stock

70 Units 70 Units 70 Units

70 Units 70 Units 70 Units

Another Example of Dynamic Safety Stock

Fig MRP - Config 14

Step a) Demand for 8 Weeks = 800 Step b) Average Daily Requirements = 896 Units of Demand for 8 Weeks / (8Weeks * 7 Days Per Week) = 896/(8*7) = 896/56 = 16 Units Step c) Calculation of Safety Stock for the coverage period As per our example in the configuration screen shot For the first period, when the stock falls below 32 units (minimum Stock Level), the SAP MRP run would create the procurement proposals (Lets Say planned order) for a quantity to suffice at least the target safety stock level or the dynamic safety stock level = 8 Units.
Dynamic safety stock formula summarized as = Average Daily Stock * Range of coverage Minimum safety stock Target safety stock Maximum safety stock Dynamic safety Dynamic safety Dynamic safety stocks for the 1st stocks for the 2nd stocks for the rest period of 8 weeks period of 8 weeks of the Horizon

= 2 * 16 = 32 = 5 * 16 = 80 = 7 * 16 = 112

= 2 * 16 = 32 = 5 * 16 = 80 = 7 * 16 = 112

= 2 * 16 = 32 = 5 * 16 = 80 = 7 * 16 = 112

SAP MRP Planning time fence and Roll Forward Period SAP MRP Planning time fence and Roll Forward Period The transaction path to configure the planning time fence and roll forward period is: SAP Customizing Implementation Guide > Production > Material Requirements Planning > Planning > MRP Areas > MRP Calculation > Define Planning Time Fence and Roll Forward Period Planning Time Fence:

The planning time fence is the number of work days, within which you can protect the master plan or in other words the procurement proposals of a master plan from being disturbed or changed from any automatic changes to the master plan. The procurement proposals are firmed so as to protect them from any changes. The firming of the procurement proposals (planned orders, purchase requisitions, delivery schedules) in the planning time fence prevents the proposals in the time fence from being adopted in the next planning run. In other words, in the planning time fence, the system does not create or delete any procurement proposals nor does it changes the existing proposals. The system calculates the time fence from todays date plus the number of days mentioned as planning time fence in the material master or in the MRP configuration (where you can define the planning time fence for plant or for a given MRP group). It is needless to say that any new requirements are not included in this time period nor the existing requirements are changed. MRP carries its usual planning outside this fence without interrupting this fenced period.
Configure Planning Time fence and Roll Forward Period Plant MRP Group Planning Time fence 0001 0001 14 0001 0002 14 Roll forward Period 32-

It is logical that any procurement proposal lying outside this fence would start moving in to the fence one by one; when the fence moves ahead on the time scale. When they move in to this fence, they are automatically firmed for protection. Firming for automatically created procurement proposals: The automatically created procurement proposals in the MRP Run are not firmed by the system, so that they are available for adjusting dates and quantities in the next planning run, in cases where there is change in BOM or task list. You can though manually firm the planned orders individually or collectively using transaction code MD19 Note - Automatically created planned orders in the planning time fence are only remain firm till they are in the planning run. Firming for manually created procurement proposals: For manually created or changed procurement proposals or even when you reschedule the planned order in the graphical planning table, the system always marks them with a firming indicator. Though you can remove or delete this firming indicator. Firming for components planned orders: In case of a planned order, you can manually firm it by selecting the firming planned order Indicator in the planned order header. And in order to make sure that the BOM levels below are not exploded or changed in a planning run, you have to set the firming components indicator See the below Example Planning time fence is 3 days.
Planning Start Date Today Day 2 Day 1 Planning time fence Planned Planned Order 1 Order 2 Auto Auto Firmed Firmed

Day 3

Day 4

Day 5

Day 6

Day 7

Day 8

Planned Order 3 Auto Firmed

Planned Order 4 Not-firmed

Planned Order 5 Firmed

Planned Order 5 Notfirmed

Planned Order 6 Notfirmed

Planned Order 7 Notfirmed

Next Planning Start Date Planning time fence Planned Planned Order 4 Order 5 Auto Auto Firmed Firmed

Planned Order 5 Auto Firmed

Roll Forward Period The Roll Forward Period adds the functionality of automatic deletion of firmed planned orders, from the master plan. It also creates new proposals to cover any requirements pending during the MRP run. This period can be defined for number of days in past or future. The system deletes all the firmed planned orders that lie before the roll forward period. Using the roll forward period, you can have the system delete all useless old firmed planned orders, which otherwise the system would never had deleted, since they were firmed. This allows for reorganizing the planned orders.

Range of Coverage Profile in Time-Phased Planning

Use
Using the range of coverage profile, you can determine a safety stock level based on current requirements. This safety stock level is calculated using the average daily requirements quantity.

Prerequisites
You have a range of coverage profile in the material master (MRP 2 view).

You define range of coverage profiles in Customizing for MRP in the IMG activity Define range of coverage profile (dynamic safety stock).

Features
Example For example, a material that has a planned delivery time of 2 days is always planned on Tuesdays. In the net requirements calculation during the planning run, the system uses the interval between the MRP date and the availability date of the next MRP date. In this particular case, the interval starts on Tuesday and ends on Thursday of the following week (8 workdays). Requirements calculation without entering a range of coverage profile The system calculates a requirement of 160 pieces using the information from the forecast that was carried out previously. If the system does not take a range of coverage into account, it simply creates a procurement proposal for 160 pieces, if the stock level is equal to zero and no firmed receipts exist.

Requirements calculation when the following range of coverage is entered 3 days 60 pieces 5 days 100 pieces 12 days 240 pieces

Minimum range of coverage Dynamic minimum safety stock Target range of coverage Dynamic target safety stock Maximum range of coverage Dynamic maximum safety stock o

o o

If warehouse stock is equal to zero, the system adds a further 100 pieces to the procurement proposal for 160 pieces mentioned above as the incoming quantity has to cover an extra 5 days. This means that the system creates a procurement proposal for 260 pieces. If warehouse stock is equal to 200 pieces, the system creates a procurement proposal for 60 pieces as the remaining 40 pieces would only cover a further 2 days and the stock should cover at least another 3 days. If the minimum safety stock level is not fulfilled, the system replenishes up to the target safety stock level. If warehouse stock is equal to 220 pieces, the system creates no procurement proposal, as the remaining 60 pieces will still cover the next 3 days requirements. If warehouse stock is equal to 410 pieces, the system creates an exception message in the planning run to the effect that excess stock exists - the stock will last longer than 12 days (160 + 12x20 = 400). Moreover, the system also indicates that the stock level of 150 pieces is too high. The target stock level is 260 pieces (requirements + target safety stock).

See also:

Calculating the Statistical Range of Coverage

Implementation Options
Calculating the range of coverage serves to determine a dynamic safety stock level based on current requirements. Statistical, in this context, means it is not the actual requirements that are taken into account, but the average daily requirements within a defined period that are calculated by the system. During the planning run, the system recalculates the dynamic safety stock for each MRP element and this safety stock is then available for planning purposes.

The statistical range of coverage calculation usually refers to the concrete requirements of make-to-stock production. You can therefore only use this for requirements, which the system lists in the net or gross planning segments of the MRP list and the stock/requirements list.

Prerequisites
The system divides up the requirements relatively evenly, that is, there are not any great variations in the requirements within the periods based upon the calculation.

In Customizing for MRP, you have defined a range of coverage profile in the IMG activity Define range of coverage profile (Dynamic safety stock). There you have determined the parameters for calculating average daily requirements as well as minimum, maximum and target ranges of coverage for different time periods.

To do this, you start from MRP in the SAP Easy Access menu and choose Environment Current settings Define range of coverage profile (Dynamic safety stock). You do not therefore need any customizing authorization in order to maintain an appropriate profile. You have assigned the range of coverage profile to the material in the material master (MRP 2 view).

Process Flow
1. The system calculates the average daily requirements using the parameters defined in the range of coverage profile (see Calculating the Average Daily Requirements). 2. The system reads the defined ranges of coverage in the range of coverage profile and calculates the minimum, maximum and target range of coverage (see Calculating the Minimum, Maximum and Target Stock Level and Values of the Statistical Range of Coverage Calculation). The target stock level represents the safety stock level. 3. The system checks for every MRP element whether the available quantity is below the minimum stock level. If stock falls below the minimum stock level due to a requirement, the system creates a procurement proposal and thus calculates the procurement quantity, so that the available quantity is replenished up to the target stock level (see Calculating the Dynamic Safety Stock).

Calculating the Average Daily Requirements

Implementation Options
The system uses the calculation of the average daily requirements as the basis for calculating the dynamic safety stock.

Prerequisites
In Customizing for MRP, you have defined the parameters for calculating the average daily requirements in the range of coverage profile itself using the IMG activity Define range of coverage profile (Dynamic safety stock). The individual parameters are: Periods (month, week or PPC planning calendar period) The periods are calendar periods, that is, the system calculates them from the calendar start of the period. A weekly period, for example, is calculated from Monday to Sunday and a month is calculated from the first calendar day to the last calendar day of the month. Number of periods that are included in calculation of average daily requirements Period length o Workdays

The system defines workdays using the factory calendar. o Calendar days The system defines calendar days using the Gregorian calendar. o Standard days You can specify, for example, that 20 days are to be used for the calculation of the monthly average.

Process Flow
1. The system uses the defined parameters to determine the number of days used for calculating the average daily requirements. If the period is defined as a week, the period length as standard days (5 days) and the number of periods as 2, the system divides the total of the requirements by 10 days. 2. The system then calculates the total of the requirements for this period.

The system takes into account all requirements in the current period, even requirements that lie in the past but are still in the current period. For example, if the planning run is carried out in the middle of the month, then those requirements that were planned at the beginning of the month are also included in the calculation of the average daily requirements. 3. The average daily requirement is calculated using the formula: Requirements in the specified number of periods / Number of days within the total period length

With time-phased materials planning, the system does not calculate average daily requirements using the number of days defined in the profile. It calculates the average daily requirements using the number of days in the interval between the MRP date and the availability date to the next MRP date. See also: Range of Coverage for Time-Phased Materials Planning

Calculating the Minimum, Maximum and Target Stock Level

Prerequisites
In Customizing for MRP, you have defined the ranges of coverage for the individual time periods in the range of coverage profile itself using the IMG activity Define range of coverage profile (Dynamic safety stock). You can define the ranges of coverage for up to three time periods, whereby you can maintain different minimum, maximum and target ranges of coverage for each period. In addition to the ranges of coverage for the three periods, you can define different ranges of coverage for particular periods. This can be useful when, for example, you have to plan

using a higher safety stock level due to increased demand in the months just before Christmas.

Process Flow
1. During the planning run the system checks whether there are any date-specific ranges of coverage on the dates of the MRP elements (requirements, planned orders, and so on). If this is the case, the system uses these different range of coverage values. If there are no daterelated range of coverage values on these dates, the system uses the values that you have maintained for the three periods. 2. The system calculates the stock levels for the corresponding time periods using the following formulas: o o o Minimum stock level: average daily requirements * minimum range of coverage Target stock level ( = dynamic safety stock): Average daily requirement * target range of coverage Maximum stock level: average daily requirement * maximum range of coverage

Calculating Dynamic Safety Stock

Process Flow
1. During every planning run, the system checks for every MRP element (requirements, planned orders and so on) whether the available quantity is below the minimum stock level. 2. If stock falls below the minimum stock level due to a requirement, the system creates a procurement proposal and thus calculates the procurement quantity, so that the available quantity is replenished up to the target stock level, that is, the dynamic safety stock. 3. If the maximum stock level is exceeded, the system adjusts the quantities for procurement proposals that are not firmed correspondingly. If the procurement proposal is firmed, the system displays an exception message. Example The system determines an average daily requirement of 15 pieces. You have defined a minimum range of coverage of 3 days, a maximum range of coverage of 7 days and a target range of coverage of 5 days. The system calculates the following: Minimum stock level = 3 x 15 pieces = 45 pieces Maximum stock level = 7 x 15 pieces = 105 pieces Target stock level = 5 x 15 pieces = 75 pieces The available quantity is 40 pieces and is therefore less than the minimum stock level. Therefore, the system creates a procurement proposal for 35 pieces (= target stock level 75 pieces actual quantity of 40 pieces) during the planning run.

The system does not plan the dynamic safety stock as a gross quantity but takes it into account in the net requirements calculation. That means that the system then increases only the quantity of an existing planned order when it is necessary due to the availability situation. If sufficient material quantities to cover the safety stock quantity are already in stock, no additional planned order is created.

In the case of time-phased materials planning, the range of coverage is calculated differently to the method described here. For information, see Range of Coverage for Time-Phased Materials Planning