Z Score for Safety Stock

elif
Contributor

Z Score for Safety Stock

Hello,

 

I need to build a formula to calculate safety stock in Anaplan. I have lead time & usage data available. I am inquiring guidance with developing the z score formula. Inputs will be appreciated, thanks! 

6 REPLIES 6
JaredDolich
Moderator

@elif 

Hey, hey @elif 

You can download the Anaplan App that a safety stock methodology that uses the MAPE, I believe the safety stock calculations are in there.

https://community.anaplan.com/t5/supply-chain/Supply-Planning/ba-p/28151

You can also check out the inventory management app too for ideas.

https://community.anaplan.com/t5/supply-chain/Inventory-Management/ba-p/28136

Alternatively, you can simplify your safety stock immensely by just using a forward looking forecast. Meaning, I want to have four weeks of forward supply as safety stock. You can easily accomplish this with a MOVINGSUM function. To be honest, that's what I use, and it works great for most use cases. Once you start going down the optimization path with a MAPE driven safety stock, e.g., I want to be 95% confident that I have enough inventory, then you run into all kinds of problems such as the errors are not normally distributed (which they normally aren't).


Jared Dolich
KBeltz
Certified Master Anaplanner

Some general build tips.

 

-calculate the decimal, round it, and convert it to text

-can use FINDITEM to match the result to a Z-Score "list" which you can manually create pretty quickly one time.  Important thing here is to have the list's code = the rounded number so anaplan can match the z-score to the list

-can do lookups or whatever you need to now for each item!

-the stat forecasting app has ways to calculate mean, median, etc

https://community.anaplan.com/t5/supply-chain/Monthly-Statistical-Forecasting-Calculation-Engine/ba-...

---To calculate the Z-score, subtract the mean from each of the individual data points and divide the result by the standard deviation. Results of zero show the point and the mean equal.

 

elif
Contributor

Thank you for the suggestions @KBeltz! I have checked the stat app to see if there is a standard deviation and z score calculations but there is not any. Is there an excel similar function (STDEV) in Anaplan for standard deviation? Thank you for the support!   

KBeltz
Certified Master Anaplanner

There isn't a STDEV calc in Anaplan.. quite unfortunately.  But there is a twisted way its calced out in the Stat App.

 

Start tracing back from the module: Descriptive Statistics History Range-->Percentiles

 

This app has not been updated/built to current best practices but you can get what you need out of it!

elif
Contributor

Got it @KBeltz . I somehow downloaded the statistical product forecasting app, which is different. Now, I see the standard deviation calculation. Thanks!

elif
Contributor

Thank you @JaredDolich for the recommended apps and the potential solution. Currently, we have a Weeks of Supply on Hand calculation that is driven by forward looking demand (forecast) rather than usage, and the logic for the WOH is similar to the solution you described. I will check the recommended apps to see if I can get further information to build a usage driven formula. Thanks again for the guidance!!