I am trying to work out the best formula to use for calculating the safety stock to be used in Heijunka/production levelling.
According to this article, the best approach is to use the root mean squared error as the metric for process variation. But it doesn't explore how many multiples of this measure of variation should be used for the appropriate safety quantity. I.e., how does one determine whether one wants to use a safety stock level of 3 times the RMSD, one times, two times, etc? Does it depend on whether the forecast variable is normally distributed? What does it depend on?