DDMRP

1ST COMPONENT INVENTORY POSITIONING

2NT COMPONENT BUFFER – ALLOW DECOUPLING POINT TO BE DECOULPED

Cap 7 Strategic Buffers

All these parts’ buffer levels are determined by summing the zones that comprise them

GREEN

The green zone is the heart of the supply order generation process embedded in the buffer. It
determines average order frequency and typical order size. The green zone is determined by
one of three factors. Whichever factor yields the greatest number determines the size of the
green zone. In this way it represents a conservative view with regard to recommended and
average order frequency.

YELLOW

The yellow zone is the heart of the inventory coverage in the buffer. The yellow zone is always
calculated as 100 percent average daily usage (ADU) × decoupled lead time (DLT)

RED

The red zone is the embedded safety in the buffer. The higher the variability associated with
the part or SKU, the larger the red zone will be. Calculating the red zone is accomplished with
three sequential equations. Buffer profiles.

3 Factors:
a. Type: manufactured (M), purchased (P), or distributed (D).

b. LT: This spread could be anywhere from almost zero lead time for on-site
supplier-managed inventory to lead times measured in months or years. There
are differing circumstances that dictate what the parameters defining short,
medium, and long within any particular environment will be. The lead time
category will then be used to supply a “lead time factor” to parts within a
profile.

1. Notice that the longer the lead time of the part, the smaller the lead time
factor should be. BIG CONCEPTUAL DIFERENCE. DDMRP is about creating
and protecting the flow of information and materials. For long lead time
parts, DDMRP is attempting to create a frequent demand signal relating to
actual need and a corresponding supplying “pipeline” delivering a steady
stream of supply orders. Difference embedded, decipting between large
infrequent orders and a steadier stream of smaller more frequent orders.
 2. A smaller lead time factor produces a smaller green zone calculation. Since
the green zone determines average order size and frequency, a smaller
lead time factor will lead to smaller and more frequent orders.

c. Variability : High, Medium and Low demand variability.

Combination Matrix
Atributos Individuais

 Average daily usage

o Horizon: Shorter periods make averages more responsive, while longer
periods offer stability.
o Frequency-of-Update Consideration: Therefore, it's recommended to
update the part's ADU frequently, ideally daily or weekly at most, with
automatic updates preferred
o Past, Forward, or Blended Consideration: The ADU calculated from past
data can be problematic when there's an anticipated demand surge not
reflected in current or upcoming ADU values.
 LT : part’s unique lead time as measured in discrete units of time (most often in days).
For any manufactured or intermediate item, this lead time should be the decoupled
lead time of the part. For purchased parts, the purchasing lead time from the part
master should be used.

 Part Minimum Order Quantity

 Location (distribuction wareshouse)

Calculo

LT = 0,5

Var = 0,33

 Green ( e heart of the supply order generation , will determine the average order
frequency and typical order size for the part, determined 1 of below 3 options )

o 1. Order Cycle : ADU × desired or imposed order cycle days

o 2. Using a Lead Time Factor : is decoupled lead time × ADU × lead time factor
o 3. Minimum Order Quantity : Only MOQ and compare with above.

 Yellow (yellow zone is the heart of the inventory coverage in the buffer). most
straightforward zone to calculate in a buffer. The yellow zone is always calculated as
ADU multiplied by the decoupled lead time. [ADU (10 per day) × DLT (12 days)].

 Red : The red zone is the embedded safety in the buffer : The higher the variability
associated with the part or SKU, the larger the red zone will be.

o 1 Base : [ADU (10 per day) × DLT (12 days) × lead time factor (0.5)] = value is 60
 This lead time factor corresponds to the same ranges used for the
green zone calculation but can have a different numerical value.
 o +
o 2 Safety : ” The red safety is calculated as a percentage of the red base. S
determined by the variability factor. [red base of 60 × 0.33 (variability factor)].
o Totaç [red base (60) + red safety (20)]

Once all zones are calculated, we can add them together to get a total buffer. In this case it is
270 [red (80) + yellow (120) + green (70)]

Remarks

Average Order Frequency Calculation:

 The average order frequency is determined by dividing the green zone by
the Average Daily Usage (ADU).
 In this example, it is calculated as 7 days, indicating that on average,
without variability, this part will be ordered every 7 days.

Embedded Safety Calculation:

 Dividing the red zone by the ADU reveals the amount of embedded
safety within the buffer.
 For this buffer, the red zone represents 8 days of safety [red zone (80)
divided by 10 (ADU)].

So, in summary:

 Average order frequency: 7 days

 Embedded safety within the buffer: 8 days