THE IMPACT OF SAFETY STOCK ON SCHEDULE INSTABILITY, COST, AND SERVICE LEVEL

Xue Bai
Ade G. Ola
Virginia State University
ABSTRACT
The impacts of safety stock on instability of the master production schedule and on cost have not been researched as much as the impact on service level. Frequent changes to production schedules in a material requirements planning environment can lead to confusion at the shop floor level and reduced productivity. This study concluded that safety stock does not necessarily improve schedule instability. However, cost decreases as safety stock increases, mainly because saving in setup cost outweighs the increase in holding cost. Also, the authors explored interactions between safety stock and other material requirements planning system factors