Garg’s Principle: Horizon-Based Safety Stock Optimization Through Dynamic Net Availability

Abstract

Conventional safety stock policies commonly use historical demand variability and service-level targets to establish inventory buffers. When applied uniformly across planning periods, these policies may overlook projected supply and demand conditions, creating unnecessary inventory without adequately addressing emerging shortages. This paper presents Garg's Principle, a deterministic framework that links inventory protection to projected feasibility across the planning horizon. The method calculates Dynamic Net Availability for each period and identifies the lowest projected inventory balance to determine whether additional protection is required. Where a shortage is projected under the specified demand and supply assumptions, a pre-shortage injection rule distributes the required supply adjustment across eligible periods before the constraint, accounting for replenishment lead time. Where projected availability remains nonnegative throughout the horizon, no additional safety stock is introduced. Artificial intelligence supports upstream forecast verification through bounded demand corrections, while inventory protection calculations remain explicit and deterministic. The framework provides an explainable and auditable approach to safety stock optimization within existing enterprise resource planning and advanced planning environments, with emphasis on limiting unnecessary inventory exposure while addressing projected shortages.