
Planning for Machine Capacity ◾ 83
For example, in our example, 1-Orange has a daily usage of 900 pieces and an
EPEI of 1. This means that the cycle stock is
Cycle Stock = 900 × 1
Cycle Stock = 900 pieces
The reason this is called cycle stock is because this stock will cycle continuously
in and out of the WIP market.
The second piece of the WIP market size is the safety stock. Safety stock is
where the producing department calculates possible risk and determines an
inventory level to protect against the risk. This risk could include many different
considerations such as abnormal downtime, poor quality, and customer demand
variation. You may ...