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Safety stock calculator and reorder point formula
Safety stock is the extra inventory you keep to cover demand and supplier delays you cannot predict. The standard formula is safety stock = Z x standard deviation of demand x square root of lead time. A part that sells 100 a week with a standard deviation of 25, a 21-day lead time and a 95% service level needs 72 units of safety stock, and its reorder point is 372. Use the calculator for one part, or paste 12 months of shipments to get a target, reorder point and min/max for every part. Morsa keeps these targets current from your ERP every night and tells you which parts are below them.
Updated October 21, 2026
Reorder when stock falls to 372 units: 300 to cover the average 21-day lead time plus 72 of safety stock, about 5 days of average demand.
SS = Z x sd x sqrt(L) = 1.645 x 9.449 a day x sqrt(21 days) = 71.2
| Service level | Z | Safety stock | Reorder point |
|---|---|---|---|
| 90% | 1.282 | 56 | 356 |
| 95% | 1.645 | 72 | 372 |
| 97.5% | 1.96 | 85 | 385 |
| 98% | 2.054 | 89 | 389 |
| 99% | 2.326 | 101 | 401 |
| 99.5% | 2.576 | 112 | 412 |
| 99.9% | 3.09 | 134 | 434 |
Service level here is the chance of not running out during one lead time (cycle service level). Going from 95% to 99% raises safety stock by about 41%.
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What is safety stock?
Safety stock (also called buffer stock) is the inventory held on top of what you expect to use while a replenishment order is on its way. It exists because demand is never exactly the forecast and suppliers do not always deliver on the promised day. Too little and you run out and miss shipments; too much and cash sits on the shelf. The right amount depends on three things: how much demand varies, how long and how reliable the lead time is, and how often you are willing to run out (the service level).
Safety stock formulas
There are four common ways to calculate safety stock. The calculator above does all four; pick the one that matches the data you have.
| Method | Formula | Use it when |
|---|---|---|
| Demand varies (standard) | SS = Z x sd of demand x sqrt(lead time) | Lead time is reliable and you know the standard deviation of demand. The most common formula. |
| Demand and lead time vary | SS = Z x sqrt(L x sd_d^2 + d^2 x sd_L^2) | Suppliers are late by different amounts, such as overseas parts. Also called the combined or King formula. |
| Max minus average | SS = (max daily demand x max lead time) - (average daily demand x average lead time) | You have no statistics, only the worst week and the longest wait. Simple, but one bad month inflates it. |
| Days of cover | SS = average daily demand x days of cover | A rule of thumb, such as “keep two weeks on hand”. Easy to explain, blind to variation. |
Z comes from the service level (1.65 for 95%). d is average daily demand, L is lead time in days, sd_d and sd_L are their standard deviations. Demand and lead time must be in the same time unit; the calculator converts for you.
How to calculate safety stock, step by step
Pull demand for the part over the last 12 months, by week or by month. Use shipments or issues, not orders received, and leave out a month that is not over yet.
Work out the average and the standard deviation of that demand. In Excel: =AVERAGE(range) and =STDEV.S(range).
Find the lead time in days from order to stock on the shelf, including receiving.
Choose a service level and look up Z. In Excel, =NORM.S.INV(0.95) returns 1.645.
Put demand and lead time in the same unit, then multiply: Z x standard deviation x square root of lead time.
Round up, and check the cash it ties up at the unit cost.
Worked example. A part sells an average of 100 units a week with a standard deviation of 25. Lead time is 21 days, which is 3 weeks. At 95% service, Z = 1.645. Safety stock = 1.645 x 25 x sqrt(3) = 71.2, so 72 units. If the supplier’s lead time also varies by 4 days either way (a standard deviation of 4 days), the combined formula gives 118 units: the late deliveries add 46 units on their own.
Max minus average example (from Omni Calculator): the most you have sold in a day is 15 and the longest wait for stock was 23 days; on average you sell 7 a day and wait 10 days. Safety stock = 15 x 23 - 7 x 10 = 275 units. That is almost 40 days of average demand, which is why this method is best kept for a quick first number.
Reorder point formula
The reorder point is the stock level that triggers a new order: reorder point = average daily demand x lead time in days + safety stock. For the example part, that is 100 / 7 x 21 = 300 units of lead time demand plus 72 of safety stock, so reorder at 372. Safety stock is part of the reorder point, not added on top of it again. When stock on hand plus stock on order falls to the reorder point, order.
Min max inventory levels
Most ERPs (Business Central, NetSuite, Prophet 21, Epicor, SAP Business One) store replenishment as a min and a max. Min is the reorder point. Max is the reorder point plus your usual order quantity, so an order brings stock back up to the max. If you do not have a set order quantity, one month of demand is a common start; the EOQ tab gives the cost-optimal size. Set the order quantity to at least the supplier’s minimum order quantity.
Service level and the Z score
The service level here is the chance of not running out during one replenishment cycle. Each step up costs more than the last, because the normal curve gets thin at the top. The table uses the worked example part.
| Service level | Z | Safety stock | vs 95% |
|---|---|---|---|
| 90% | 1.28 | 56 units | -22% |
| 95% | 1.64 | 72 units | base |
| 97.5% | 1.96 | 85 units | +19% |
| 98% | 2.05 | 89 units | +25% |
| 99% | 2.33 | 101 units | +41% |
| 99.5% | 2.58 | 112 units | +57% |
| 99.9% | 3.09 | 134 units | +88% |
Z = NORM.S.INV(service level). Many plants use 98% or 99% on A parts and 90% to 95% on C parts; some give cheap C parts the highest service because the buffer costs little.
Stock targets from 12 months of shipments
The second tab does the same math for every part at once. Paste or upload shipment lines (part, ship date, quantity) and, if you have them, unit cost, lead time, on hand and a make-to-order flag. It groups shipments by month, skips the current month because it is not over, and sorts each part by how often it ships:
Steady: shipped in 9 or more of 12 months. Gets a safety stock, reorder point and max.
Lumpy: shipped in 3 to 8 months. Gets a target, but check it by hand; the normal formula overstates stock for spiky demand.
To order: shipped in 2 or fewer months, or flagged make to order. Gets no stock target, and any stock on the shelf is shown as cash tied up.
Parts are classed A, B or C by shipment value, and each class gets its own service level (98%, 95% and 90% by default). In the sample file, a small plant’s year of shipments, 2 steady parts are below their reorder point: 41-2200 check valve 1 in has 520 on hand against a reorder point of 742, and 41-3307 bracket, zinc plated has 1,450 against 1,771. And 77-0915, a manifold block, custom made to order, has $7,400 sitting on the shelf. The download lists every part with its numbers.
EOQ formula: how much to order
Economic order quantity is the order size that keeps the yearly cost of ordering plus the cost of holding stock as low as possible: EOQ = sqrt(2 x annual demand x cost per order / holding cost per unit per year). Wikipedia’s example: 10,000 units a year, $40 per order, $5 a year to hold one unit. EOQ = sqrt(2 x 10,000 x 40 / 5) = 400 units, 25 orders a year, $1,000 in ordering cost and $1,000 in holding cost. Ordering 800 at a time instead costs $2,500 a year, $500 more. Holding cost is usually 20% to 30% of the unit cost a year once storage, insurance, shrink and the cost of money are counted.
ABC analysis for inventory
ABC analysis ranks parts by annual usage value (quantity x unit cost) and splits them into classes. A is the small group of parts that makes up about 80% of the value, B the next 15%, C the rest. A parts deserve tight targets and frequent review; C parts can run on simple rules. In a typical list of seven parts worth $60,000, $20,000, $8,000, $6,000, $3,000, $2,000 and $1,000, the first two are A (80% of value), the next three B and the last two C. In this tool, the part that crosses a line stays in the higher class, so one part worth 90% of the total is A, not B.
Common safety stock mistakes
Mixing time units. A weekly standard deviation with a lead time in days makes safety stock about 2.6 times too high. Convert first, or let the calculator do it.
Counting a part month. An export run on the 12th includes 12 days of this month as if they were a full month, which pulls every average down.
Safety stock on made-to-order parts. A part that ships twice a year does not need a buffer; it needs to be built or bought to the order.
Using orders instead of shipments. Orders include cancellations and duplicates. Use what actually shipped.
Setting it once. Demand and lead times change. Recalculate at least each quarter, and right away when a supplier’s lead time moves.
Ignoring the supplier. For overseas or unreliable suppliers, lead time variation often matters more than demand variation. Use the combined formula.
The modern way: stock targets that keep themselves current
In most plants, stock targets live in a spreadsheet that someone rebuilds once a year, and the ERP’s min and max drift out of date in between. Morsa connects to your ERP and reads twelve months of shipments every night. Parts that ship every week get a stock target; parts below it are flagged, and the made-to-order part with cash on the shelf is called out. Second shift is told what to build tonight on the machines that are free, and buyers get the orders to approve. When a supplier slips, Morsa shows which parts and customer orders it hits before the shelf runs empty. At JRG Automotive it caught 5 of 8 production-stopping shortages early, saving $2 million.
Frequently asked questions
How do you calculate safety stock?
Multiply the Z score for your service level by the standard deviation of demand and by the square root of the lead time, with demand and lead time in the same unit. For 100 a week with a standard deviation of 25, a 3-week lead time and 95% service: 1.645 x 25 x sqrt(3) = 72 units.
What is the difference between safety stock and reorder point?
Safety stock is the buffer you hope not to use. The reorder point is the level that triggers a new order: the demand you expect during the lead time plus the safety stock.
What is a good safety stock level?
One that gives the service level you need at a cost you accept. Most manufacturers and distributors aim for 95% to 99% on the parts customers wait for, and less on the rest. If a part’s safety stock is more than a few weeks of demand, check the lead time and the demand history before you buy it.
How do I calculate safety stock in Excel?
Put 12 months of demand in a column. Then =NORM.S.INV(0.95)*STDEV.S(B2:B13)*SQRT(lead time in months). Make sure the lead time is in the same unit as the demand column.
What service level should I use?
Start with 95%. Raise it on A parts and on parts that stop a line or a key customer when they run out; lower it on cheap, slow C parts. Going from 95% to 99% raises safety stock by about 41%.
How often should safety stock be recalculated?
At least every quarter, and whenever a supplier’s lead time changes or demand moves a lot. Morsa recalculates from your ERP every night.
Does lead time include weekends?
Use calendar days from the order to the part being on the shelf, and keep demand per calendar day to match. If you count working days, count demand per working day too.
Should made-to-order parts have safety stock?
Usually not. If a part ships only a few times a year, build or buy it to the order. Stock on the shelf for a made-to-order part is cash tied up; the shipments tab flags it.
Is my data uploaded anywhere?
No. The calculator and the shipments tab run in your browser. Nothing you type, paste or upload leaves your device.
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