Enter the max daily usage, max lead time, average daily usage, and average lead time into the calculator to determine the safety stock

## Safety Stock Formula

The following formula is used to calculate the safety stock of a product.

S = (MU*ML) – (AU*AL)

- Where S is the safety stock
- MU is the maximum daily usage
- ML is the maximum lead time
- AU is the average daily usage
- AL is the average lead time

## Safety Stock Definition

A safety stock is defined as the total amount of stock a company should have on hand to handle any sudden increase in demand.

## Safety Stock Example

How to calculate safety stock?

**First, determine the maximum daily usage.**This should be the large daily usage the product has seen over it’s lifetime.

**Next, determine the maximum lead time.**This will be the longest time it’s taken the product to be delivered to your warehouse, or longest time it took to produce if it’s being made in house.

**Next, determine the average usage.**This will be the average daily usage over the most recent time period.

**Nest, determine the average lead time.**As before, calculate the average lead time to receive or produce product.

**Finally, calculate the safety stock.**Using the formula above, calculate the safety stock you require.

## FAQ

**What is a safety stock?**

A safety stock is the amount of goods or products a company should have on hand at all times to mitigate any rapid changes in demand of a product?

**How much safety stock should i have?**

The equation above is the standard formula for calculating your safety stock levels, but your true levels should be based on many factors like cash flow, past demand issues, ect.

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