Safety Stock Calculator

Safety stock is the extra inventory you keep on hand to protect against uncertainty in both demand and supply. It acts as a buffer between your forecasted demand and actual sales, ensuring you can still fulfill orders even when demand spikes unexpectedly or your supplier ships late.

The Safety Stock Formula

The standard safety stock formula is SS = Z x σ x √L, where:

• Z (Z-score) — The number of standard deviations from the mean corresponding to your desired service level. A 95% service level uses Z = 1.65.
• σ (sigma) — The standard deviation of daily demand. This measures how much your daily sales vary from the average.
• L (lead time) — The number of days between placing a purchase order and receiving the goods. The square root accounts for variance accumulating over multiple days.

Understanding Reorder Points

The reorder point is the inventory level at which you should place a new purchase order. It equals your average demand during lead time plus your safety stock: ROP = (Average Daily Sales x Lead Time) + Safety Stock. When your inventory hits this number, it is time to reorder so that your safety stock buffer is replenished before you run out.

Why Service Level Matters

Your service level represents the probability that you will not run out of stock during the lead time period. A 95% service level means you expect to have enough stock to meet demand 95% of the time. Higher service levels require more safety stock and higher carrying costs, so the right level depends on the product's importance, margin, and customer expectations.

How Nventory Helps

Nventory automatically tracks your demand patterns and supplier lead times across every sales channel. Instead of calculating safety stock manually, Nventory's real-time inventory engine monitors stock levels and alerts you when it is time to reorder — factoring in your historical variability, current sell-through rates, and incoming purchase orders.