Safety stock is the extra inventory you keep for the weeks when things don't go to plan. Too little and you sell out. Too much and your cash is stuck. Here's a simple way to calculate it.
Worst case minus normal case
Here's a common formula. Multiply your busiest daily sales by your longest lead time. Then subtract your average daily sales, multiplied by your average lead time. What's left is your safety stock.
- Worst case: Max daily sales × max lead time
- Normal case: Avg daily sales × avg lead time
- Safety stock: Worst case − normal case
Work it through
For example. On your best days you sell seven units, and the slowest delivery took twenty days. That's one hundred forty. Normally you sell four a day, with a fourteen day lead time. That's fifty-six. Your safety stock is eighty-four units.
- Worst case: 7 a day × 20 days = 140
- Normal case: 4 a day × 14 days = 56
- Safety stock: 140 − 56 = 84 units
Not one size fits all
Don't use one number for every product. Your best sellers, and anything with a slow or unreliable supplier, deserve more buffer. Slow movers need less. Review it each season, as demand shifts.
- More: Best sellers, unreliable suppliers
- Less: Slow movers
- Review: Every season
Want the number without the arithmetic? Use the free safety stock calculator.
Doing this at scale
StockSense calculates this for every product, from your real order history. It builds lead-time-aware safety stock into each forecast, and gives you a reorder point, a quantity, and a date. See StockSense.