Our logic is to define a level of safety and constantly monitor how the safety is being used. This safety is called a buffer.

The quantity kept at the stock locations including the plant warehouse (PWH) and regional warehouse (RWH) is defined as buffer size, and this is a stock type buffer. The buffer size in this system (Make to stock Buffer Size) is the number of units one would like to keep overall in the supply chain for this stock location from this SKU.

For example – if the stock buffer size is 100 units and currently at the stock location there are 40 units, there are approximately 60 units to order or on the way from the feeding stock location to this one (the feeding stock location for the Plant Warehouse is the plant). If those 60 units are not on the way, a replenishment order of 60 units should be issued immediately.

It is important to note that different stock locations will have different buffers for the same SKU, since the supply and/or demand pattern might be different between them.