Size safety stock from demand variability, lead time and the service level you want to hold.
Safety stock scales with the square root of lead time, not lead time itself, because variability partially cancels over a longer window. Raising service level from 95% to 99% increases the Z value by about 40%, which is why the last few points of availability are disproportionately expensive. Halving supplier lead time cuts required safety stock by about 30%, which is usually cheaper than financing the extra inventory.
Safety Stock
Safety stock = Z × standard deviation of demand × √lead time
Safety stock = Z × standard deviation of demand × √lead time Safety stock scales with the square root of lead time, not lead time itself, because variability partially cancels over a longer window. Raising service level from 95% to 99% increases the Z value by about 40%, which is why the last few points of availability are disproportionately expensive.
Halving supplier lead time cuts required safety stock by about 30%, which is usually cheaper than financing the extra inventory.
This calculator takes 4 inputs: Average daily demand, Standard deviation of daily demand, Supplier lead time, Target service level. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.