From Gerpheides statement regarding safety stock of 34-720 components,

he said their MRP system doesnt have a data field to handle safety stock
and that he obtained the safety stock values, he tweaked the system a little
bit by adjusting the demand values in order to get the safety stock. This
method will calculate the necessary safety stock to achieve a target service
level provided that both lead time and demand are normally distributed but
doesnt take into account failure rate, reorder period, or order quantity
requirements which is part of cycle stock.
Also, he mentioned there is no safety stock for ball valve 34-850 since that
component has low demand. Normally companies use this strategy to reduce
their inventory level by setting their safety stock levels to zero but it also
reduces their service level if the inventory goes down. This unwanted sideeffect will wind up costing them substantially more than the expense of some
additional stock because Gerpheide mentioned that recently they have
experienced a stock-out of the ball valve during their recent ordering cycle.
To have zero safety stock, the z-value of the service level must be zero or
demand variations and lead time must be zero. Accepting that normal lead
time, normal demand, standard deviation of the lead time and the standard
deviation of the demand stick with it, any safety stock decrease will clearly
bring about service level decrease. Security stock is intended to forestall
stock outs when there is variability in your demand and supply. By lessening
the variability, you lessen your safety stock. Safety stock is intended to keep
most of the stock outs, not every one of them. You can plan your safety stock
to fulfill your client service level however there will dependably be stock
outs. One of the fundamental variables when ascertaining safety stock is the
service level. Safety stock increments with the client service level. At the
point when the administration level qualities reach over 95% the wellbeing
stock number increment exponentially. Measurably talking, the safety stock
is unbounded for 100% service level. What really matters is stock outs are
certain yet we can keep them to a base by diminishing variability.

Wilkins Company must focus on reducing variations in their demand and

supply instead of using zero safety stock. Also, safety stock calculations must
take into account upstream failure rate, reorder period, or order quantity
requirements along with demand and lead-time variations.