Safety stocks and component commonality

Component commonality refers to a situation in which one component is common to more than one end item. The presence of commonality makes it difficult to determine safety stocks accurately. The existing theory, which is reviewed briefly, examines the effects of commonality on the component’s safety factor. However, commonality destroys the relationship between safety factor and service level. This article introduces a simple example to illustrate this fact. The example suggests some problems that must be addressed if the theory is to encompass commonality. Among these are the need to develop service level measures for multiple products and to analyze the relationship between safety stock and service level.