Calculate Buffer Zones
Explanation
This activity is used to calculate buffer zones based on the unprotected
lead time, lead time category and variability category. Further minimum lot
size and imposed order cycle will also be considered. As a result of performing
this job, Green Zone, Yellow Zone and Red zone will be established for parts
with Auto Update buffer levels allowed.
After this process is executed Buffer Zones will be determined as below.
If any Adjustments are applicable then they will also affect the buffer zone
calculations as well.
Green Zone will be established based on the maximum of the following equations:
- Imposed Order Cycle * Operational Average Daily Usage
- Minimum Order Lot Size Qty
- Average Daily Usage * Unprotected Lead Time * Green Lead Time factor
Yellow Zone will be established by calculating:
- Average Daily Usage * Unprotected Lead Time
Red Zone will be calculated as the sum of Red Base and Red Safety, which
is calculated as below:
- Red Base = Operational Average Daily Usage * Unprotected Lead Time
* Red Lead Time factor
- Red Safety = Variability Factor * Red Base
Prerequisites
- Part should be defined as buffered part.
- Unprotected lead times for both the purchased and manufactured parts
must have been calculated.
- Lead Time Category and Variability Category should be
assigned to part.
- If required, Minimum Order Qty and Imposed Order Cycle
should be specified.
System Effects
- After this process is executed Green Zone, Red Zone and Yellow Zone
are established.