Safety stock and reorder point
How much buffer to hold against uncertain demand and uncertain lead time, and the stock level at which to reorder.
Safety stock = z × √( Lead time × σ(demand)² + Average demand² × σ(lead time)² )
Reorder point = Average daily demand × Lead time + Safety stock
z = the standard normal value for the chosen cycle service level
Safety stock exists to cover the gap between what you expected during the replenishment lead time and what actually happened. Two things create that gap: demand that varies from day to day, and deliveries that do not always take the same number of days.
The formula combines both sources. In the starting example the lead-time term is five times larger than the demand term, which is typical: an unreliable supplier usually costs more buffer than volatile customers do.
Calculator
The fields start with a worked example. Replace them with your own figures; the results update as you type.
- z value
- 1.645
- Safety stock
- 431 units
- Reorder point
- 1,511 units
How to read it
The service level here is the chance of not running out during one replenishment cycle. It is not the fill rate. A 95 percent cycle service level normally produces a fill rate well above 95 percent, because most stockouts are small.
Common mistakes
- The formula assumes roughly normal demand. For slow movers that sell zero on most days it overstates or understates badly.
- Going from 95 to 99 percent raises z from 1.64 to 2.33, so the buffer grows by about 40 percent for four points of service.
- Recalculate when the supplier or the route changes. Lead-time variability is the input people forget to update.
Last reviewed 19 October 2026.