Safety Stock Calculator
Calculate the optimal safety stock buffer using the statistical formula that accounts for variability in both demand and lead time, with a selectable service level.
Results
What is it?
Safety stock is the buffer inventory held to guard against stockouts caused by unexpected spikes in demand or supplier delays. The statistical formula accounts for variability in both demand (sigma_d) and lead time (sigma_L): Safety Stock = Z x sqrt(L x sigma_d^2 + D^2 x sigma_L^2), where Z is the service-level z-score. A 95% service level means you expect to satisfy demand from stock 95% of replenishment cycles.
How to use
Enter your average daily demand, the standard deviation of daily demand, the average supplier lead time, its standard deviation, and your target service level. If your lead time is perfectly reliable (same every time), set lead time std. deviation to 0. The calculator outputs safety stock units and the resulting reorder point.
Example scenario
Avg daily demand: 50 units (sigma: 10). Avg lead time: 14 days (sigma: 2). Service level: 95% (Z = 1.65). Variance = 14 x 100 + 2500 x 4 = 11,400. Std dev = sqrt(11,400) = 106.8 units. Safety stock = 1.65 x 106.8 = 176 units. Reorder point = 50 x 14 + 176 = 876 units.
Pro tip
Calculate safety stock separately for each SKU — a one-size-fits-all approach leads to overstock on slow movers and stockouts on fast movers. High-margin, hard-to-substitute products warrant 99%+ service levels; commodity items with many substitutes can often operate at 90%. Review safety stock quarterly as demand patterns and supplier reliability change.