🛡️ Safety Stock Calculator

Safety stock is the extra inventory held above the reorder point as a buffer against demand and supply uncertainty. A widely used standard approximation in supply chain management is Safety Stock = Z-score × Demand Std. Deviation × √(Average Lead Time). The Z-score corresponds to the target service level (probability of not stocking out): 90% → 1.28, 95% → 1.65, 97.5% → 1.96, 99% → 2.33. For example, at a 95% service level (Z=1.65), 7-day average lead time, and demand std. deviation of 20 units/day: Safety Stock = 1.65 × 20 × √7 ≈ 1.65 × 20 × 2.646 ≈ 87.3, rounding to about 87 units.

Because the Z-score increases with the target service level (90% → 1.28, 99% → 2.33), holding lead time and demand variability constant, a higher service level target proportionally increases safety stock. This is a direct trade-off: lower stockout risk in exchange for higher inventory holding cost — so it's common practice to set higher service levels only for critical items where stockouts are costly. The result from this calculator feeds directly into the Reorder Point Calculator.