Planning Parameters
Planning parameters are the key variables used to control and optimize production, purchasing, and inventory in a supply chain. They help companies make decisions based on demand, capacity, and capital tied up in inventory.
What are Planning Parameters?
Planning parameters can include factors such as safety stock, reorder points, lead time, demand forecast, minimum and maximum stock levels, and production time. Together, they provide a basis for planning and managing materials and resources effectively.
What are Planning Parameters used for?
Planning parameters are used to ensure that production and purchasing are aligned with demand, that there is neither too much nor too little in stock, and that tied-up capital is minimized. They serve as tools to balance risk, service level, and costs in the supply chain.
When are Planning Parameters used?
Planning parameters are used continuously in:
- Production planning
- Inventory management
- Purchasing planning
- Forecasting and supply chain optimization