What is safety stock in SAP SCM-APO - Advanced Planning and Optimization?

SAP Term: safety stock

• Component: SCM-APO

• Component Name: Advanced Planning and Optimization

• Description: The quantity of stock that is always available in the warehouse to fulfill unexpectedly high demand, or that can be used in production if there are time delays.

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• Key Concepts: 
  Safety stock is an inventory management technique used to ensure that a company has enough stock on hand to meet customer demand. It is a buffer stock that is kept in reserve to protect against unexpected fluctuations in demand or supply. It is also known as buffer stock or reserve stock. 
  
  How to use it: 
  Safety stock can be used in SAP Advanced Planning and Optimization (APO) to help ensure that customer orders are fulfilled on time. The safety stock level can be set based on the expected demand and supply fluctuations, and the system will automatically adjust the inventory levels accordingly. 
  
  Tips & Tricks: 
  When setting the safety stock level, it is important to consider the lead time for replenishing inventory, as well as the cost of carrying additional inventory. It is also important to monitor the safety stock levels regularly to ensure that they are still appropriate for the current demand and supply situation. 
  
  Related Information: 
  Safety stock is one of many inventory management techniques used in SAP APO. Other techniques include reorder point, min-max planning, and ABC analysis.