How To Calculate Safety Stock Inventory. Inventory management software for your business. Calculate safety stock differently if lead time is the primary variable.
Safety stock = (standard deviation) * (service factor). Safety stock calculation is no rocket science really. This method doesn't take service levels into consideration.
As a business, you need to turn a profit, so buying extra supply may seem counterintuitive.
Now that you have that number, it’s important to determine when you should place a new order for products. It also has an average daily usage of 7 units and an average lead time of 10 days. Safety stock incorporates the fluctuations in supply and demand, which gives a more reliable reorder point. There are two ways to calculate safety stock: