Safety Stocks in Multi-Echelon Systems

Abstract

All materials coordination concepts presented in 3.2 require buffers to cope with uncertainty. In this chapter, approaches for the determination of planned safety stocks for multi-echelon supply chains are discussed, developed, and extended. The additional complexity in multi-echelon networks compared to single-echelon inventory models results from two main sources. The first one is that due to large internal order releases, shortages at the supply stockpoint can occur that increase the replenishment lead time and therefore, require additional buffers. The second aspect is the possibility of allocating safety stocks over the entire system. For didactical purposes, the simplest version of a multi-echelon network, the serial system, is presented first, though it is only a special case of convergent and divergent networks.