How does the physical reserve system operate?

The physical reserve system operates through a 12-month rolling average plus a 10% buffer. This approach helps organizations maintain adequate reserves to meet physical inventory or operational needs by taking into account fluctuating demand over an extended period. The rolling average allows for adjustments based on recent data, ensuring that calculations reflect current trends rather than being skewed by outdated figures. The additional 10% buffer provides a safeguard against unexpected increases in demand or potential supply chain disruptions, allowing for more resilient planning and inventory management. This method supports more accurate forecasting and resource allocation, which is crucial for maintaining operational efficiency.