What is minimum stock level in SAP SCM-FRE - Forecasting and Replenishment?

SAP Term: minimum stock level

• Component: SCM-FRE

• Component Name: Forecasting and Replenishment

• Description: Minimum inventory kept in a retail or customer-facing location. The minimum stock may be used for presentation, showroom, or demonstration purposes, but is typically included in inventory available to meet demand. Stock should usually not fall below the minimum stock level.

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• Key Concepts: 
  Minimum stock level is a term used in SAP's Forecasting and Replenishment component of Supply Chain Management (SCM-FRE). It is the minimum amount of inventory that must be maintained in order to meet customer demand. This level is determined by the company's inventory policy and is used to ensure that there is always enough stock on hand to meet customer needs.
  
  How to use it: 
  The minimum stock level can be set in the SAP system by entering the desired amount into the “Minimum Stock Level” field. This value will then be used to calculate the replenishment quantity for each item in the inventory. The replenishment quantity will be based on the current stock level, the minimum stock level, and the forecasted demand for each item.
  
  Tips & Tricks: 
  It is important to set an appropriate minimum stock level for each item in order to ensure that customer demand can be met without overstocking or understocking. Setting too low of a minimum stock level can lead to stockouts, while setting too high of a minimum stock level can lead to excess inventory and higher costs.
  
  Related Information: 
  The replenishment quantity calculation is based on the following formula: Replenishment Quantity = (Minimum Stock Level - Current Stock Level) + Forecasted Demand. This formula ensures that the replenishment quantity takes into account both current stock levels and future demand.