When the supply risk for an item cannot be determined (less than 3 valid delivery records available), it will receive this default offset days value.

This value influences safety stock, so increasing it, will increase safety stock for those items. Specifying a negative value will decrease safety stock for those items.

When using these parameters, it is important to determine whether the business’s suppliers have a bias towards late or early deliveries, under or over supply, and whether accumulating excess stock or stocking out will be more detrimental.

Typically, a default risk of 20% would do. However, if suppliers are not delivering on time and in full the default risk percentage could be increased to increase the amount of safety stock.

Alternatively, if suppliers are generally performing well then the default could be lowered to 10% to decrease the amount of safety stock held.

Leave the default offset days as 0 for most instances. However, the same guideline for setting a default risk holds true.

Refer to this article for a detailed explanation of Supply 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 is new or has less than 3 purchase receipts from the primary supplier.