How to calculate safety stock levels

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Working out how much stock to carry is a challenging task. If you carry too much, you tie up working capital. Too little, and you face potential stockouts and unhappy customers.

Safety stock is the extra layer of inventory kept to help deal with this problem.

In this guide we show you how to calculate safety stock - from basic safety stock formulas to the most sophisticated and accurate.

We'll also provide strategies for finding the right balance between inventory costs and availability.

Topics include:

  • The basics of safety stock management
  • The importance of accurate safety stock levels
  • Methods for calculating safety stock and examples

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