Safety stock protects against stockouts caused by demand spikes or supplier delays. By combining demand variability, lead time, and a target service level, you determine how much buffer inventory to carry and when to trigger a replenishment order. This calculator uses the standard normal-distribution approach common in operations management.
How to use this calculator
- Enter average daily demand for the product.
- Input the standard deviation of daily demand (measure from historical sales data).
- Set supplier lead time in days from order placement to receipt.
- Choose a Z-score for your target service level (default 1.65 ≈ 95% in-stock probability).
- Review safety stock units and the reorder point (demand during lead time + safety stock).
Formula
Safety stock = Z × σ_demand × √(Lead time days). Reorder point = (Average daily demand × Lead time days) + Safety stock. Z-score maps to service level: 1.28 ≈ 90%, 1.65 ≈ 95%, 2.33 ≈ 99%.
Example
With 50 units/day average demand, 12 units standard deviation, 14-day lead time, and Z = 1.65: safety stock ≈ 74 units, reorder point ≈ 774 units (700 demand during lead time + 74 safety stock).
Frequently asked questions
What Z-score should I use?
Z = 1.65 targets ~95% service level — a common retail default. Critical medical or production components may use Z = 2.33 (99%). Higher Z means more safety stock and carrying cost.
How do I find demand standard deviation?
Calculate the standard deviation of daily sales over the past 3–12 months. Use the same time granularity (daily) as your average demand input.
Does this account for lead time variability?
This model assumes fixed lead time. If supplier delivery times vary significantly, use an extended formula incorporating lead time standard deviation.
How does reorder point trigger ordering?
When on-hand inventory drops to the reorder point, place an order for the EOQ (or your standard order quantity). The safety stock covers demand during lead time plus unexpected spikes.