Safety stock is the extra inventory held above expected demand to absorb the volatility in demand and the variability in supplier lead times. It reduces stockout risk under the chosen policy; it does not guarantee availability.
Quick answers
What is safety stock? Safety stock is the buffer of inventory held above expected demand to protect against stockouts when actual demand or supplier lead time differs from the forecast. It's the difference between "how much you're statistically expected to need" and "how much you actually keep on hand."
What is the safety stock formula? safety stock = z × σ × √(lead time in days). z is the z-score for your target service level (1.28 for 90% service, 1.65 for 95%, 2.33 for 99%). σ is the standard deviation of daily demand. lead time is the days between placing an order and receiving it.
What's a typical safety stock target? Most operators run blended service levels: 95%+ for top movers and critical items (1 stockout in 20 cycles), 75–90% for the long tail (1 stockout in 4–10 cycles). 100% service is uneconomical because the safety stock required grows asymptotically.
How is safety stock different from a PAR level? Safety stock is the buffer above expected demand. PAR level is the total target inventory: PAR = base demand + safety stock + manual buffer. Safety stock is one component of PAR, not the whole thing.
The formula and its assumptions
The simple z × σ × √L model assumes a fixed lead time, stable independent daily demand and a suitable approximation for lead-time demand. Use consistent time units. Variable lead time, correlated demand, sparse events and known bookings may require a different model. The target is cycle service, not unit fill rate.