Research On The Optimization Of Safety Stock Based On Supply Chain Demand Prediction

In the enterprise, inventory is a "reservoir", regulating the imbalance between the production and demand. Safety stock is an important part of inventory management, which is the foundation of the inventory set. Used for the prevention of the large number of sudden orders, extension of delivery time, inaccurately demand prediction and so on, it also played a big role in enhancing the production satisfaction, increasing marginal benefit from customers, reducing response time, and enhancing the credibility of enterprises.With the increasing competition in current market, the rapid high-tech development, shrink of product life cycles and the complexity of product mix, coupled with the tremendous changes of the political, economic and social environment, all of these factors, which affect supply chain, require increasing safety stock to avoid losses caused by shortages of stock, which however increases the cost of supply chain. Only safety stock based on the combination of both Service levels and costs will not affect normal production and be able to avoid blind excessive procurement. Therefore, the key of the successful supply chain is to find an effective way to reduce safety stock without prejudicing product supply situation.This paper chiefly discusses the demand and the safety stock of a company from the point of supply chain. Firstly, the paper introduces the definition, classification, principles and objectives, characteristics of supply chain management, and its decision-making process. Then, the forms, sources and factors of the random demand of supply chain are analyzed. Secondly, the paper introduces the concept of safety stock, and the assessment methods of the factors affecting the safety stock level, such as demand, service level. Thirdly, the paper explores the steps of demand prediction of supply chain, based on which the paper analyzes the marketing demand with time series model. Finally, the paper puts forward the method of determining the safety stock based on the demand prediction, and optimization method based on time. Then some mathematic models and Excel tools are used to analyze the case of the paint company C to explain the method.