Safety Stock
Buffer stock from service level.
These tools are provided for educational and operational guidance only. Results are estimates and may not reflect all factors in your business. Always review calculations and use your own professional judgement before making decisions.
What is Safety Stock?
Safety stock is the extra inventory you keep as a buffer to protect against uncertainty in demand or supply.
Safety Stock Formula
This implementation uses a common approximation:
Safety stock = z × σD × √L
- z = service factor from the normal distribution (e.g. 1.65 for ~95%).
- σD = standard deviation of demand per period.
- L = lead time measured in the same periods as σD.
In the calculator, you enter the service factor z, demand variability, and lead time. The tool then computes the safety stock that should sit on top of your expected lead-time demand.
Safety Stock Example
Suppose your demand has a standard deviation of 20 units per period, lead time is 2 periods, and you want approximately 95% service level, which corresponds to z ≈ 1.65.
Safety stock = 1.65 × 20 × √2 ≈ 47 units.
Operationally, this means you plan to carry about 47 units more than your expected demand during lead time, so that most random demand peaks or small delays do not cause stockouts.
When should you use this calculator?
- When you want to move from “rule of thumb” buffers to service-level-based buffers.
- When demand is variable and you have historical data to estimate volatility.
- When lead times are not perfectly reliable and you want extra protection.
- When you are designing or reviewing inventory policies for important SKUs.
- When you need to explain to stakeholders why some items require more buffer than others.
How this tool helps your business
- Reduces costly stockouts on strategic items while keeping buffers intentional.
- Helps you allocate inventory more intelligently across A/B/C classes.
- Links service-level targets to concrete inventory decisions that finance can understand.
- Supports scenario analysis when lead times or demand volatility change.
Related tools
- Reorder Point Calculator – combine safety stock with lead-time demand to set when to reorder.
- Lead Time Demand Calculator – estimate expected demand during lead time before adding safety stock.
- Fill Rate Calculator – measure the service level your safety stock policy actually delivers.
- ABC Classification – prioritize where you invest more safety stock based on item value.
Safety Stock – Frequently Asked Questions
How do I choose the right service level?
Higher service levels mean more safety stock and cost. Reserve very high targets (for example 98–99%) for critical or high-margin items, and use lower targets for C items.
What if I do not have demand standard deviation?
You can approximate variability using historical demand data or ranges (min and max). Even rough estimates are better than arbitrary buffer percentages.
Does this formula cover lead time variability?
This version assumes variability in demand per period and a fixed number of periods in lead time. More advanced models can also incorporate lead time variance explicitly.
How often should I recalculate safety stock?
Recalculate when demand volatility, service targets, or lead times change significantly—for example after seasonality shifts or changes in suppliers.