Safety Stock Calculator

Do you know what your safety stock levels should be?

What every planner needs to know:  What should be my safety stock? Said another way, can I address any customer need I have from either inventory or production within the customer’s required window? What does the customer need today? The answer is  likely something similar to what they wanted yesterday. The secret is….you don’t need to know exactly what they want, only the range of what they could possibly want, to calibrate the safety stock.

 They’ll be a lot of skeptics out there who’ll say, “Yes, but safety stock can never account for all the demand uncertainly, supply uncertainty, capacity issues.” Our answer to this comment is, “You’re not calculating it correctly.” There are powerful new algorithms available that account for variables such as customer order lead time, the true variability of supply lead time, and even highly interdependent product wheels that will definitively calculate your safety stock for you, account for the seasonality, and re-adjust daily.

What is the right calculation of safety stock? It should account for:

• the service level you want to provide for that SKU at that location,
• its demand,
• supply lead time,
• the noise in those two variables,
• customer lead time and,
• quantity you typically produce (i.e. EOQ)

Try our Safety Stock Calculator to see if your numbers are in the right range.