What is safety stock? Does your business need a safety stock in 2022?

What is safety stock?

Why Do You Need a Safety Stock?

Why Use the Safety Stock Formula?

How do you calculate Safety Stock?

Z × ΣLT × D AVG

1 | Calculation of Lead Time

2 | Calculation of Demand

3 | Initiate Service Level

4 | Calculation of safety stock

6 Different Formulas for calculating safety stock

Formula 1: Basic Safety Stock Formula

Formula 2: Average — Max Formula

Formula 3: Normal distribution with unpredictable demand

Formula 4: Normal Distribution with lead time uncertainty.

Formula 5: For normal distribution with uncertain demand and independent lead time.

Formula 6: Normal distribution with uncertain demand & ‘dependent’ lead time

Conclusion

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