Operations
Safety stock
The buffer that covers demand variability during a lead time at the target service level.
The Formula
SS = z x sd x sqrt(L)
The buffer that covers demand variability during a lead time at the target service level.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| SS | Safety stock | number | Buffer held in units. |
| z | Service factor | number | 1.645 at 95 percent and 2.326 at 99 percent. |
| sd | Demand standard deviation | number | Standard deviation of daily demand. |
| L | Lead time | number | Days from placing an order to receipt. |
What Each Symbol Means
SSnumber
Safety stock
Buffer held in units.
znumber
Service factor
1.645 at 95 percent and 2.326 at 99 percent.
sdnumber
Demand standard deviation
Standard deviation of daily demand.
Lnumber
Lead time
Days from placing an order to receipt.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate safety stock page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Safety Stock, filed under Business. Every number the guide produces comes from substituting into this one line.