Definition
Safety stock is buffer inventory above expected lead-time demand. Simple methods use days of cover; statistical methods use a service factor (Z), demand variability and lead time. Too little causes stockouts; too much ties up cash.
Formula
Safety stock ≈ Z × σ(daily demand) × √(lead time in days)
(Simple alternative: average daily demand × buffer days)
(Simple alternative: average daily demand × buffer days)
Worked example
σ(daily demand)=4, lead time=25 days, Z≈1.65 (~95%). Safety stock ≈ 1.65 × 4 × √25 ≈ 33 units.
Why it matters for replenishment
Without a buffer, any late container or viral day turns into a stockout during the exact window your PO is already in transit.
How OmniRestock uses this
OmniRestock includes safety stock when it computes reorder points, stockout dates and replenishment suggestions.