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Calculating Safety Stock Requirements using Microsoft Dynamics AX 2012

by Scott Hamilton
Consultant and Author, The Manufacturing Guild

Safety stock requirements often represent a key element in S&OP game plans for those scenarios with stocked end-items or stocked components.  Within Microsoft Dynamics AX 2012, an item's safety stock requirement is defined by the minimum quantity field, and you can calculate a proposed minimum quantity based on an item's historical usage.  These calculations also identify the potential change in inventory value of the proposed minimum quantities.  However, the use of these calculations and the minimum quantity field are often poorly understood or even unused, which can lead to ineffective S&OP game plans for stocked items.     

This article reviews the two major variations about the significance of the minimum quantity field as the basis for safety stock requirements.  It describes how to manually define an item's minimum quantity and provides suggestions for calculating an item's minimum quantity based on historical usage. 

1.  Significance of the Minimum Quantity Field

The significance of the minimum quantity within AX differs between two major approaches for solving S&OP scenarios with stocked items.[1]  One approach employs the minimum quantity as part of min-max logic, and the second approach employs the minimum quantity to represent an inventory plan in combination with demand forecasts.  

  • Minimum quantity for min-max purposes.  Min-max quantities provide one approach to S&OP game plans with a stocked item.  When using a min-max coverage code, you specify the item's minimum quantity and maximum quantity for each relevant site/warehouse.  The minimum quantity represents the average daily usage multiplied by the item's lead time.  Alternatively, you can define a pattern (termed a minimum key and a ...

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About Scott Hamilton

Scott Hamilton has consulted globally with several hundred manufacturing/distribution companies on SCM and ERP issues. His publications include multiple books about SCM using Dynamics 365FO/AX, two textbooks about SCM/ERP, and 100+ articles in Scott has been a frequent speaker at Microsoft and user group conferences around the world, and a 10-time winner of the rarely given Microsoft MVP award.

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