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Safety Stock Calculation: Formula & Example

Last updated: 2026-08-13 · Source: MADES AI manufacturing database

With a daily demand standard deviation of 20 units and a 7-day lead time, the safety stock is 87.3 units (Z = 1.65 for the target service level).

How do you calculate safety stock?

Safety Stock = Z × σdemand × √(lead time) = 1.65 × 20 × √7 ≈ 87.3 units

ParameterValue
Z-score (service level)1.65
Safety stock87.3 units

Safety stock buffers against demand variability during lead time. Higher service levels increase Z and required stock.

Frequently Asked Questions

How do you calculate safety stock?

Safety Stock = Z × σ(daily demand) × √(lead time in days). Example: 1.65 × 20 × √7 ≈ 87 units.

What is a good safety stock level?

It depends on your target service level and demand variability. MADES AI computes it from your demand data.

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