What is safety stock?
    Safety stock is an additional quantity of an item held by a company 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 of an item are greater than planned and/or the company‘s supplier is unable to deliver additional units at the expected time.
    If the company is a manufacturer, a safety stock of materials could minimize the risk of production being disrupted.

    Parameter：
    D：Rolling ordered qty in the past 44 weeks + forecast in next 8 weeks
    s：Sample standard deviation of D
    k：coefficient service，SMT A: 90% =1.28;SMT B: 85%=0.84; C 75%=0.67; D 0
    T: Period=4 weeks

    Formular：safety stock=image.png

    k: coefficient service
    Suppose the demand follows a normal distribution
    Safety Stock - 图2

    Risk (%) 25 20 15 10 5 1 0.5
    Service (%) 75 80 85 90 95 99 99.5
    k 0.67 0.84 1.04 1.28 1.64 2.33 3.09

    Safety Stock - 图3