Answer first
What this calculator tells you
Calculate safety stock and the reorder point from service level, demand variation and lead time. Hold enough buffer stock to meet a target chance of not running out during the lead time. Formula: Safety stock = z × demand standard deviation × √lead time; reorder point = average daily demand × lead time + safety stock. At the worked-example inputs, the safety stock (units) is 98.7. Holding every other input steady, moving daily demand standard deviation (units) from 16 to 24 moves the result from 79 to 118.4.
Transparent method
The formula
Hold enough buffer stock to meet a target chance of not running out during the lead time.
Worked example
Example inputs
How to interpret the result
Safety stock buys protection against demand that runs higher than average while you wait for a delivery. The buffer grows with the variation in demand, with the square root of the lead time and with the service level you want. With daily demand varying by 20 units, a 9 day lead time and a 95 percent target, the buffer is about 99 units, and the reorder point is about 999.
At the worked-example inputs the safety stock (units) is 98.7. It rises with service level, daily demand standard deviation (units) and lead time (days); average daily demand (units) does not move it.
These are planning metrics, not audited accounting or a valuation opinion.
Before you rely on it
What to check
Base the standard deviation on real demand history over the same unit of time as the lead time. A guess makes the whole buffer a guess.
The common error
Where people go wrong with safety stock calculator
Multiplying by the lead time instead of its square root. That treats each day's variation as perfectly linked and overstates the buffer for longer lead times.
Sensitivity evidence
How daily demand standard deviation (units) changes the safety stock (units)
Holding every other input at the worked-example value, moving daily demand standard deviation (units) from 16 to 24 moves the safety stock (units) from 79 to 118.4: a spread of 39.5, or 40% of the worked-example result.
| Daily demand standard deviation (units) | Safety stock (units) | Reorder point (units) |
|---|---|---|
| 16 | 79 | 979 |
| 18 | 88.8 | 988.8 |
| 20worked example | 98.7 | 998.7 |
| 22 | 108.6 | 1,008.6 |
| 24 | 118.4 | 1,018.4 |
Every input, tested
Which input moves the safety stock (units) most
Of the 4 inputs, service level moves the safety stock (units) most (62.7 across the range tested) and lead time (days) moves it least (11). Average daily demand (units) does not change it at all.
| Input | Tested from | To | Safety stock (units) at each end | Swing |
|---|---|---|---|---|
| Service level | 90 percent | 99 percent | 76.9 to 139.6 | 62.7 (64%) |
| Daily demand standard deviation (units) | 18 | 22 | 88.8 to 108.6 | 19.7 (20%) |
| Lead time (days) | 8 | 10 | 93 to 104 | 11 (11%) |
| Average daily demand (units) | 90 | 110 | 98.7 to 98.7 | none |
Two variables at once
Safety stock (units) by daily demand standard deviation (units) and lead time (days)
Across the grid the safety stock (units) runs from 69.6 to 130.9. Moving daily demand standard deviation (units) from 16 to 24 shifts it by 39.5 at the middle column, and moving lead time (days) from 7 to 11 shifts it by 22.1 at the middle row, so daily demand standard deviation (units) is the bigger lever here.
| Daily demand standard deviation (units) \ Lead time (days) | 7 | 9 | 11 |
|---|---|---|---|
| 16 | 69.6 | 79 | 87.3 |
| 18 | 78.3 | 88.8 | 98.2 |
| 20 | 87 | 98.7 | 109.1 |
| 22 | 95.7 | 108.6 | 120 |
| 24 | 104.4 | 118.4 | 130.9 |
The highlighted cell is the worked example: 98.7.
Step by step
The worked example, input by input
| Input | Value used | What it means |
|---|---|---|
| Service level | 95 percent | The chance of not running out during the lead time. |
| Daily demand standard deviation (units) | 20 | Enter the daily demand standard deviation (units) used in this calculation. |
| Lead time (days) | 9 | Enter the lead time (days) used in this calculation. |
| Average daily demand (units) | 100 | Enter the average daily demand (units) used in this calculation. |
| Safety stock (units) | 98.7 | |
| Reorder point (units) | 998.7 | |
Inputs, definitions and assumptions
Service level
The chance of not running out during the lead time. The prefilled worked-example value is 95 percent.
Daily demand standard deviation (units)
Enter the daily demand standard deviation (units) used in this calculation. The prefilled worked-example value is 20.
Lead time (days)
Enter the lead time (days) used in this calculation. The prefilled worked-example value is 9.
Average daily demand (units)
Enter the average daily demand (units) used in this calculation. The prefilled worked-example value is 100.
How to use this calculator
- 1Verify the inputs. Gather service level, daily demand standard deviation (units), lead time (days) and average daily demand (units) from your own documents; the prefilled values are examples.
- 2Save a baseline. The worked example puts the safety stock (units) at 98.7. Store your own version of it as Scenario A.
- 3Test one change. Start with service level, the input with the biggest effect here: switching service level changes the safety stock (units): 90 percent gives 76.9; 95 percent gives 98.7; 97.5 percent gives 117.6; 99 percent gives 139.6.
- 4Check the boundary. Read the interpretation boundary above before acting on the result.
People also ask
Frequently asked questions
How do you calculate safety stock?
Safety stock = z × demand standard deviation × √lead time; reorder point = average daily demand × lead time + safety stock. At the worked-example inputs the safety stock (units) is 98.7.
What does the safety stock result mean?
Hold enough buffer stock to meet a target chance of not running out during the lead time. At the worked-example inputs the safety stock (units) is 98.7. It rises with service level, daily demand standard deviation (units) and lead time (days); average daily demand (units) does not move it.
How much does daily demand standard deviation (units) change the safety stock (units)?
Holding every other input at the worked-example value, moving daily demand standard deviation (units) from 16 to 24 moves the safety stock (units) from 79 to 118.4, a spread of 39.5.
What are the limits of this safety stock calculator?
These are planning metrics, not audited accounting or a valuation opinion. The tables on this page test daily demand standard deviation (units) only from 16 to 24; a value outside that range is not tabulated here.
Which input moves the safety stock (units) most in the safety stock calculator?
Ranked by how far each moves the safety stock (units) across the range tested: service level (62.7, 64%), daily demand standard deviation (units) (19.7, 20%) and lead time (days) (11, 11%). Average daily demand (units) does not change it.
How much does service level matter in the safety stock calculator?
The worked example uses 95 percent. With the other inputs left at the worked example, switching service level changes the safety stock (units): 90 percent gives 76.9; 95 percent gives 98.7; 97.5 percent gives 117.6; 99 percent gives 139.6.
How much does lead time (days) matter in the safety stock calculator?
The worked example uses 9. Holding every other input at its worked-example value, moving lead time (days) from 8 to 10 takes the safety stock (units) from 93 to 104, a swing of 11% of the worked-example figure.
How much does average daily demand (units) matter in the safety stock calculator?
The worked example uses 100. The safety stock (units) does not depend on average daily demand (units); it moves the reorder point (units) from 908.7 to 1,088.7 instead when average daily demand (units) goes from 90 to 110.
Which inputs change the reorder point (units) in the safety stock calculator?
At the worked-example inputs it is 998.7. Service level takes it from 976.9 to 1,039.6, daily demand standard deviation (units) takes it from 988.8 to 1,008.6, lead time (days) takes it from 893 to 1,104 and average daily demand (units) takes it from 908.7 to 1,088.7.
What is inventory turnover and why does it matter?
Cost of goods sold divided by average inventory. A low turnover means stock sits and ties up cash, and a very high one can mean frequent stockouts.
Sources and evidence
Free Calculators Online is independent and is not affiliated with or endorsed by the source organizations. Educational estimates only.