What is safety stock and how much do I need?

Safety stock is the buffer held to absorb variability in demand and in supplier lead times. The quantity depends on how erratic each is and the service level you want to hold: steadier demand and reliable lead times need less, and a higher target service level needs more. It is sized per SKU, since the variability is per SKU.

Lead-time variability usually drives the number more than demand variability does. A supplier who is late by three weeks once a quarter forces more buffer than a product whose weekly sales bounce around.

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