Inventory

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

Last reviewed 19 October 2026.