When the forecast risk for an item cannot be determined, it will receive these offset days. This value influences Safety Stock, so increasing it, will increase safety stock for those items. Making it negative will decrease safety stock for those items.

When using these parameters, it is important to determine whether the business has a bias towards over or under forecasting and whether accumulating excess stock or stocking out will be more detrimental.

Typically, a default risk of 50% would do. However, if the business has a problem with their stockholding and doesn't want to calculate too much safety stock, a lower percentage may be more appropriate. Alternatively, if their main problem is achieving their target fill rate, a higher default would be more appropriate.

It's generally best to leave the default offset days set to 0. If there is a clear bias towards under or over forecasting on newer items, it's better to correct the problem at the source by adjusting the forecast itself.

Refer to this article for a detailed explanation of Forecast Risk and Offset.

Question: When would the default risk and default offset be required? Why would I have a case where the risk or offset cannot be determined?

Answer: When the item at the location has less than 7 months of sales history.