Safety Stock & Reorder Point Calculator

How this is calculated

Lead-time demand is what you expect to consume while waiting for a replenishment order to arrive. Safety stock is the extra buffer on top of that, sized so that normal demand variability rarely runs you out before the order lands. The reorder point is the on-hand quantity where you should place the next order.

Here z is the service-level factor (for example 1.65 for a 95% cycle service level), σd is the standard deviation of daily demand, and lead time is in days. A higher service level uses a larger z and buys more safety stock, with diminishing returns as you approach 100%.

What this model assumes

• Demand variability only. This version treats lead time as fixed and models variability in demand alone. If your lead time also swings, real safety stock needs to be larger.
• Roughly normal, independent demand. The z-factor assumes daily demand is approximately normally distributed and days are independent. Heavy seasonality or correlated spikes break that.
• Cycle service level, not fill rate. The service level here is the probability of not stocking out during a replenishment cycle, which is not the same as the fraction of units shipped on time.
• Cycle stock is separate. Cycle stock (the working inventory that rises and falls between orders, roughly half the order quantity on average) is not part of safety stock. Size the order quantity with EOQ.

Pair this with the economic order quantity calculator to decide how much to order, and the inventory carrying cost calculator to price the buffer you are holding. For the broader operating context, see the lean manufacturing guide.