The following values are important for defining the reorder point:
Safety stock
Average consumption
Replenishment lead time
The following values are important for defining the safety stock:
Past consumption values (historical data) or future requirements
Vendor/production delivery timelines
Service level to be achieved
Forecast error, that is, the deviation from the expected requirements
ACD
To determine the safety stock, the system requires the following data:
● RLT
● Service level (factor according to standard distribution)
● Mean absolute deviation
Reference:
S4525 Consumption Based Planning and Forecasting in SAP S/4HANA l Pg. 124
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