How to Use the Lead Time Demand and Safety Stock Calculator
Placing an order does not put stock on the shelf β the lead time has to pass first, and everything sold in the meantime has to already be on hand. This calculator sets the reorder point as lead time demand plus safety stock. When units on hand drop below that number, it is time to place the order.
Safety stock uses the statistical formula Z Γ daily demand standard deviation Γ βlead time: the more your daily demand swings and the longer the supplier takes, the more cushion you need. The service factor Z for each target service level is shown below, and the calculator uses exactly these values.
| Target service level | Service factor Z |
|---|---|
| 90% | 1.28 |
| 95% | 1.65 |
| 97.5% | 1.96 |
| 99% | 2.33 |
If you do not know the standard deviation, leave it at 0: safety stock becomes 0 units, the reorder point equals lead time demand, and the note under the results says so. This formula assumes lead time itself is stable, so pick a higher service level when your supplier delivery dates move around. Order quantity is a separate decision β minimum order quantities, shelf life and economic order quantity all feed into it.
Frequently Asked Questions
Calculating it from the last 30 to 90 days of daily shipments is the accurate route. Until you have that, leave it at 0 to see lead time demand alone and recalculate once the data exists.
The service factor Z rises, so safety stock and the reorder point both go up. Stockout risk drops but carrying cost rises, so weigh the cost of a stockout against the cost of holding more.
No. The reorder point decides when to order; how much to order comes from a separate rule such as a minimum order quantity or economic order quantity.