Safety Stock Calculator

Formula

The formula to calculate the Safety Stock (S) is:

\[ S = (\text{MU} \cdot \text{ML}) - (\text{AU} \cdot \text{AL}) \]

Where:

\( \text{MU} \) is the Maximum Daily Usage
\( \text{ML} \) is the Maximum Lead Time
\( \text{AU} \) is the Average Daily Usage
\( \text{AL} \) is the Average Lead Time

What is Safety Stock?

Safety stock is defined as the total amount of stock a company should have on hand to handle any sudden increase in demand. It acts as a buffer to ensure that a company can continue to meet customer demand even when there are fluctuations in usage or lead time.

Example Calculation

Let's assume the following values:

Maximum Daily Usage (MU) = 100 units
Maximum Lead Time (ML) = 10 days
Average Daily Usage (AU) = 80 units
Average Lead Time (AL) = 8 days

Using the formula to calculate the Safety Stock:

\[ S = (100 \cdot 10) - (80 \cdot 8) = 1000 - 640 = 360 \text{ units} \]

The Safety Stock is 360 units.