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How much safety stock do you really need?

Safety stock = service factor × demand standard deviation × square root of supplier lead time.

Standard deviation of daily demand (units)

Supplier lead time (days)

Target service level 90% (factor 1.28)95% (factor 1.65)97.5% (factor 1.96)99% (factor 2.33)

Calculate

Example: standard deviation 5, 14-day lead time, and 95% service level → safety stock = 1.65 × 5 × √14 ≈ 31 units.