What is Safety stock?
Safety stock is extra inventory kept to cover demand spikes and supplier delays: Z × daily sales variation × √lead time.
Example
At a 95% service level, sales varying by 5 units a day and a 16-day lead time need about 33 units of safety stock.
Why it matters
Stockouts cost sales and, on marketplaces, can hurt rankings that take weeks to recover.
Calculate it: Reorder Point Calculator
Safety stock and when to reorder
Flashcard
What is safety stock?
Tap to reveal the answerSafety stock is extra inventory kept to cover demand spikes and supplier delays: Z × daily sales variation × √lead time.
Related terms
Reorder point
The reorder point is the stock level at which you should place a new purchase order: average daily sales × lead time + safety stock.
Lead time
Lead time is how long it takes from placing a purchase order until the stock is available to sell — production, freight, customs and warehouse receiving.
Read more in our guide: Safety Stock and Reorder Point: When to Reorder Inventory