Enter the mean demand, standard deviation of demand, and lead time into the calculator to determine the safety stock according to the Sakasegawa formula. This calculator helps in inventory management to maintain an optimal level of stock.
Sakasegawa Formula
The following formula is used to calculate the safety stock according to the Sakasegawa method.
SS = √L * σ * √(1 + (σ/λ)²)
Variables:
- SS is the safety stock
- L is the lead time
- σ is the standard deviation of demand
- λ is the mean demand
To calculate the safety stock using the Sakasegawa formula, multiply the square root of the lead time by the standard deviation of demand, and then multiply the result by the square root of one plus the square of the ratio of the standard deviation to the mean demand.
What is Safety Stock?
Safety stock is the additional quantity of an item held in inventory in order to reduce the risk that the item will be out of stock. Safety stock acts as a buffer in case the sales are greater than planned and/or the supplier is unable to deliver additional units at the expected time. The Sakasegawa formula is a statistical method used to calculate safety stock considering the variability in demand and lead time.
How to Calculate Safety Stock Using the Sakasegawa Formula?
The following steps outline how to calculate the safety stock using the Sakasegawa formula.
- First, determine the mean demand (λ) over a certain period.
- Next, determine the standard deviation of demand (σ) over the same period.
- Next, determine the lead time (L) in the same time units used for mean and standard deviation.
- Next, gather the formula from above = SS = √L * σ * √(1 + (σ/λ)²).
- Finally, calculate the safety stock (SS).
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
mean demand (λ) = 100 units per day
standard deviation of demand (σ) = 15 units per day
lead time (L) = 30 days
