Logistics & Supply Chain
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Safety Stock

Buffer inventory that absorbs demand variability during lead time.

Formula

SS=ZσLSS = Z \sigma \sqrt{L}

Variables

SSSafety stock
ZService-level factor
\sigmaDemand std dev
LLead time

Example

Z=1.65, σ=20, L=9: SS = 1.65×20×3 = 99

Did You Know?

Chasing a 99% service level instead of 95% can nearly double the safety stock required.

logisticssafety stockservice level

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