Which z value should I use?

That is a business decision. z links to a cycle service level through the normal distribution; this guide does not choose one for you.

Does it work for lumpy demand?

Normal-based formulas fit poorly for slow or intermittent items; use a method validated for that data.

Must σ and lead time use the same period?

Yes. Daily σ needs lead time in days.

How to calculate safety stock

With variable demand, safety stock is the service factor z times the standard deviation of daily demand times the square root of lead time. You choose z for the service level you want.

Skip the maths and use the safety stock calculator

The formula

Demand variation: SS = z × σd × √L. Combined: SS = z × √(L × σd² + d² × σL²). Fixed cover: SS = daily demand × days of cover.

Step by step

Choose the method that matches the variation you have data for.
Pick the z value for your chosen service level.
Measure σ of daily demand (and of lead time, if combined).
Apply the formula.

Worked example

z = 1.65, σd = 10 units/day, lead time 9 days

√9 = 3
SS = 1.65 × 10 × 3

Safety stock is 49.5, so about 50 units.

Common questions

Calculators for this

Cite this page

APA

Free Calculator. (n.d.). How to calculate safety stock. https://freecalculator.tech/guides/how-to-calculate-safety-stock

MLA

"How to calculate safety stock." Free Calculator, https://freecalculator.tech/guides/how-to-calculate-safety-stock.

Link

How to calculate safety stock — Free Calculator, https://freecalculator.tech/guides/how-to-calculate-safety-stock