Free tool
Safety stock calculator
Safety stock is the extra inventory that covers variation in demand and in supplier lead time, so you do not run out between placing an order and receiving it. The common formula multiplies a z-score for your service level by the variation in demand over the lead time. Add the safety stock to the demand during the lead time and you have the reorder point.
Safety stockequalsZ × √( L × σd² + d² × σL² )
Reorder pointequalsd × L + Safety stock
Share of order cycles with no stockout
Average use per day
How much daily demand swings (STDEV of daily use)
Order placed to stock available
0 if the supplier is always on time
Pre-filled with the worked example. Use the same unit (pieces, kg, cases) for demand and for the result. Safety stock is rounded up to whole units.
Safety stock
99 units
Extra stock held for a 95% service level (z = 1.64).
Reorder point
999 units
Lead-time demand + safety stock
Lead-time demand
900 units
Daily demand × lead time
Z-score
1.64
From the service level
How to calculate it
Five inputs, each from data you already have
Service level is the chance you want of getting through a replenishment cycle with no stockout. 95% gives z = 1.645, 98% gives 2.054 and 99% gives 2.326.
Average daily demand and its standard deviation come from the item's recent daily use. In a spreadsheet, the AVERAGE and STDEV of the daily figures give both.
Average lead time and its standard deviation come from the last several orders: days from order placed to stock available. A supplier who is always on time has a standard deviation of 0, but check the receiving dates, not the promised ones.
Lead time variation is multiplied by daily demand, so on a fast-moving part even a small swing in supplier lead time adds a lot of safety stock. Shortening and steadying lead time is how a lean plant holds less stock for the same service, and the result feeds the size of each kanban loop.
Worked example
Illustrative numbers, not a benchmarkA part used at 100 units a day on average, with a daily standard deviation of 20 units. The supplier takes 9 days and is always on time. You want a 95% service level.
- 1Z for 95% = 1.645.
- 2Safety stock = 1.645 × 20 × √9 = 1.645 × 20 × 3 = 98.7, rounded up to 99 units.
- 3Demand during the lead time = 100 × 9 = 900 units.
- 4Reorder point = 900 + 99 = 999 units.
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<iframe src="https://www.theleansuite.com/tools/safety-stock-calculator/embed" title="Safety stock calculator by LeanSuite" width="100%" height="1020" style="border:0;max-width:1000px" loading="lazy" allow="clipboard-write"></iframe>
<p style="font:13px/1.4 sans-serif"><a href="https://www.theleansuite.com/tools/safety-stock-calculator">Safety stock calculator</a> by LeanSuite</p>How LeanSuite helps
LeanSuite is not an inventory or planning system, so keep stock figures in your ERP. LeanSuite's Loss & Cost Management puts a cost on each loss, and its Loss Prioritization Matrix turns that data into an action plan ranked by cost.
See Loss & Cost ManagementRead more
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FAQ
Safety stock calculator: common questions
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