Dynamic safety stock calculation

Dynamic safety stock is calculated using a formula that multiplies the average daily requirement by the range of coverage. The range of coverage is determined by parameters like the number of days that material needs to be available. A company's ERP system can then calculate dynamic safety stock levels and generate order proposals based on the defined coverage profile. The document provides an example of how dynamic safety stock was calculated over multiple periods using a coverage range of 3 days for the first two periods and 5 days for subsequent periods. Purchase orders were created to maintain the calculated safety stock levels.