Safety Stock Calculator
Safety stock is the buffer sized so demand does not run out during a lead time.
Safety stock
32
- Reorder point
- 272
- Buffer as a share of lead time demand
- 13.33%
Values update as you type. This calculator covers the single scenario its formula assumes — see Common Mistakes for what it leaves out.
The formula this calculator uses
safety stock = z x demand standard deviation x sqrt(lead time)
- SS
- Safety stock in units
- z
- Service factor, 1.645 at 95 percent and 2.326 at 99 percent
- sd
- Standard deviation of daily demand, in units
- L
- Lead time in days
How to check the result by hand
- 1
Decide the service level
Ninety five percent is the usual retail target. Go higher only where a stockout is expensive, dangerous or breaches a contract.
- 2
Measure the standard deviation of daily demand
Use the same product over a comparable period. A monthly standard deviation divided by the square root of thirty is not the same thing and will give the wrong buffer.
- 3
Multiply the factor by the standard deviation
1.645 times 8 is 13.16 units. This is the buffer that would cover a single day of lead time at the target service level.
- 4
Multiply by the square root of lead time
13.16 times the square root of six is about 32 units. Random variation accumulates as a square root, so a longer lead time needs less than proportionally more.
- 5
Add it to average demand during the lead time
Forty units a day over six days is 240, and adding 32 gives a reorder point of 272. The buffer protects the service level; the reorder point decides when to order.
For worked examples, common mistakes and the limits of this formula, read the full How To Calculate Safety Stock page.