Logiwa Resource
Safety Stock Calculator
and demand while minimizing potential overstock.
Safety Stock Formula:
Using the formula
- Maximum Daily Use is 100 units.
- Maximum Lead Time is 5 days.
- Average Daily Use is 80 units.
- Average Lead Time is 4 days.
Safety Stock = ( 100 units × 5 days) − ( 80 units × 4 days)
Safety Stock = 500 − 320 = 180 units
180 units of safety stock would be needed to cover fluctuations in both daily usage and lead time.
Safety Stock Calculator
Explanation of
the formula
Maximum daily use is the highest amount of inventory typically used in one day.
Maximum lead time is the longest lead time it might take to receive inventory.
Average daily use is the typical daily usage of inventory.
Average lead time is the usual time it takes to receive an order.
Maximum daily use × Maximum lead time: This represents the worst-case scenario, where you experience the highest demand and the longest delay in receiving stock. It gives the upper bound of the inventory you might need to cover this scenario.
Average daily use × Average lead time: This part represents your expected or typical usage, considering normal daily demand and normal lead times.
The difference between these two values is the safety stock required to handle any fluctuations in demand or lead time that exceed the typical average. Essentially, it helps to account for unexpected spikes in usage or longer-than-normal delays in replenishment.
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