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Supplier Lead Time Variability Calculator

Work out supplier lead time variability instantly with clear inputs, formula shown and shareable results.

About Supplier Lead Time Variability Calculator

When lead time is the variable element, safety stock is the service factor multiplied by average daily demand and the standard deviation of lead time. The coefficient of variation classifies supplier reliability, and above 0.30 the inventory cost of the variability usually justifies dual sourcing.

Formulas

Safety stock

SS = z x Average daily demand x Standard deviation of lead time

Reorder point

ROP = Average daily demand x Average lead time + Safety stock

Coefficient of variation

CV = Standard deviation / Average lead time

Worked example

With the default values below, Supplier Lead Time Variability Calculator returns Safety stock for lead time variability of 2,772. Change any input above and every figure here is recalculated in your browser.

Inputs used

Average lead time
28
Lead time standard deviation
7
Average daily demand
240
Service factor z
1.65

Results

Safety stock for lead time variability
2,772
Coefficient of variation of lead time
0.2500
Reorder point
9,492
Reliability assessment
Moderate variability

Step by step

  1. 1Values used
  2. 2Safety stock
  3. 3Reorder point
  4. 4Coefficient of variation
  5. 5Safety stock for lead time variability= 2,772
  6. 6Coefficient of variation of lead time= 0.2500
  7. 7Reorder point= 9,492
  8. 8Reliability assessment= Moderate variability

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 4 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

Why does lead time variability cost so much?

Because safety stock scales directly with it. Halving lead time variability halves the safety stock needed for the same service level.

Is a longer but consistent lead time better than a shorter erratic one?

Usually yes. Consistency lets you plan; variability forces you to hold inventory against the worst case.

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