Safety stock is the margin of error required based on the
customer service level and the deviation of the demand during the
lead time. The safety stock coverage level is the z-value in
standard statistics for calculating the confidence interval for a
customer service level.
Safety Stock = Required Inventory Coverage Level * Standard Error of the
Demand during the Lead time
Safety Stock = Required Inventory Coverage Level * RMSE * Square-root of
(Lead time)
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Safety Stock Coverage
Values at various required Service Levels
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|
|
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|
Service Level Required |
Inventory Coverage |
Incremental Service
Level |
Incremental Coverage
Required |
Coverage Level per point
increase in Service Level |
|
50.00% |
0.000 |
|
|
|
|
70.00% |
0.524 |
0.2000 |
0.524 |
0.02622 |
|
75.00% |
0.674 |
0.0500 |
0.150 |
0.03002 |
|
80.00% |
0.842 |
0.0500 |
0.167 |
0.03343 |
|
80.50% |
0.860 |
0.0050 |
0.018 |
0.03599 |
|
81.00% |
0.878 |
0.0050 |
0.018 |
0.03656 |
|
81.50% |
0.896 |
0.0050 |
0.019 |
0.03715 |
|
82.00% |
0.915 |
0.0050 |
0.019 |
0.03778 |
|
82.50% |
0.935 |
0.0050 |
0.019 |
0.03845 |
|
83.00% |
0.954 |
0.0050 |
0.020 |
0.03915 |
|
83.50% |
0.974 |
0.0050 |
0.020 |
0.03990 |
|
84.00% |
0.994 |
0.0050 |
0.020 |
0.04069 |
|
84.50% |
1.015 |
0.0050 |
0.021 |
0.04153 |
|
85.00% |
1.036 |
0.0050 |
0.021 |
0.04242 |
|
85.50% |
1.058 |
0.0050 |
0.022 |
0.04338 |
|
86.00% |
1.080 |
0.0050 |
0.022 |
0.04440 |
|
86.50% |
1.103 |
0.0050 |
0.023 |
0.04549 |
|
87.00% |
1.126 |
0.0050 |
0.023 |
0.04666 |
|
87.50% |
1.150 |
0.0050 |
0.024 |
0.04792 |
|
88.00% |
1.175 |
0.0050 |
0.025 |
0.04927 |
|
88.50% |
1.200 |
0.0050 |
0.025 |
0.05074 |
|
89.00% |
1.227 |
0.0050 |
0.026 |
0.05234 |
|
89.50% |
1.254 |
0.0050 |
0.027 |
0.05407 |
|
90.00% |
1.282 |
0.0050 |
0.028 |
0.05597 |
|
90.50% |
1.311 |
0.0050 |
0.029 |
0.05806 |
|
91.00% |
1.341 |
0.0050 |
0.030 |
0.06035 |
|
91.50% |
1.372 |
0.0050 |
0.031 |
0.06290 |
|
92.00% |
1.405 |
0.0050 |
0.033 |
0.06574 |
|
92.50% |
1.440 |
0.0050 |
0.034 |
0.06892 |
|
93.00% |
1.476 |
0.0050 |
0.036 |
0.07252 |
|
93.50% |
1.514 |
0.0050 |
0.038 |
0.07662 |
|
94.00% |
1.555 |
0.0050 |
0.041 |
0.08134 |
|
94.50% |
1.598 |
0.0050 |
0.043 |
0.08684 |
|
95.00% |
1.645 |
0.0050 |
0.047 |
0.09332 |
|
95.50% |
1.695 |
0.0050 |
0.051 |
0.10109 |
|
96.00% |
1.751 |
0.0050 |
0.055 |
0.11058 |
|
96.50% |
1.812 |
0.0050 |
0.061 |
0.12245 |
|
97.00% |
1.881 |
0.0050 |
0.069 |
0.13777 |
|
97.50% |
1.960 |
0.0050 |
0.079 |
0.15834 |
|
98.00% |
2.054 |
0.0050 |
0.094 |
0.18757 |
|
98.10% |
2.075 |
0.0010 |
0.021 |
0.21106 |
|
98.20% |
2.097 |
0.0010 |
0.022 |
0.22073 |
|
98.30% |
2.120 |
0.0010 |
0.023 |
0.23144 |
|
98.40% |
2.144 |
0.0010 |
0.024 |
0.24339 |
|
98.50% |
2.170 |
0.0010 |
0.026 |
0.25680 |
|
98.60% |
2.197 |
0.0010 |
0.027 |
0.27196 |
|
98.70% |
2.226 |
0.0010 |
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