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A buffer of extra inventory held to protect against demand or supply variability.
Safety stock is the cushion of stock you keep above expected demand to avoid stockouts when sales spike or a supplier is late. It absorbs the uncertainty in both demand and lead time.
Set it too low and you risk lost sales; set it too high and you tie up cash and warehouse space. The right level balances service level against carrying cost.
Safety stock = Z × σ_LT
Z is the service-level factor; σ_LT is the standard deviation of demand over lead time.
See it in AWRA OpsHub
Inventory Balancing & Replenishment
The stock level that triggers a new purchase or production order.
The total time between placing an order and receiving the goods.
Running out of an item so demand cannot be fulfilled.
The order size that minimises the combined cost of ordering and holding stock.