Safety stock is your buffer against uncertainty. Learn how to calculate optimal levels.
Basic Formula
Safety Stock = Z × σLT × √L where Z is service level, σLT is demand variability, and L is lead time.
Factors to Consider
Lead time variability, demand fluctuations, and service level targets all play a role in determining the right amount.
Dynamic Adjustments
Revisit your safety stock levels quarterly to account for changing conditions.