Definition
What is Safety Stock?
Buffer inventory held to absorb demand spikes and supplier delays.
Safety stock is the cushion between expected demand and reality. It protects against two risks at once: demand running hotter than forecast and replenishment arriving later than promised. The right level balances the cost of a stockout (lost sales, ad waste, marketplace ranking damage) against the carrying cost of extra units.
Formula
Safety Stock ≈ (Max Daily Sales × Max Lead Time) − (Avg Daily Sales × Avg Lead Time)Example
If sales can spike to 18/day (avg 12) and lead time can stretch to 21 days (avg 14), safety stock ≈ (18 × 21) − (12 × 14) = 210 units.