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Safety Stock For Supplier Risk Calculator

Work out safety stock for supplier risk instantly with clear inputs, formula shown and shareable results.

About Safety Stock For Supplier Risk Calculator

Safety stock against demand uncertainty is the service factor multiplied by the daily demand standard deviation and the square root of lead time. The square root matters: doubling lead time increases the required safety stock by only about 41%, not 100%.

Formulas

Safety stock

SS = z x sigma_daily x sqrt(Lead time in days)

Reorder point

ROP = Average daily demand x Lead time + Safety stock

Worked example

With the default values below, Safety Stock For Supplier Risk Calculator returns Safety stock of 658. Change any input above and every figure here is recalculated in your browser.

Inputs used

Average daily demand
320
Daily demand standard deviation
70
Lead time
21
Service factor z
2.05

Results

Safety stock
658
Reorder point
7,378
Lead time demand
6,720
Days of cover the safety stock provides
2.05

Step by step

  1. 1Values used
  2. 2Safety stock
  3. 3Reorder point
  4. 4Safety stock= 658
  5. 5Reorder point= 7,378
  6. 6Lead time demand= 6,720
  7. 7Days of cover the safety stock provides= 2.05

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Which z value matches my service level?

1.28 for 90%, 1.65 for 95%, 2.05 for 98% and 2.33 for 99% cycle service level.

Why does the square root appear?

Because daily demand deviations are independent, so variances add over the lead time and the standard deviation grows with the square root of the days.

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