Calculating safety stock involves understanding various factors like lead time variability, demand variability, and desired service levels. Here’s a simplified formula to get you started:
\[ \text{Safety Stock} = Z \times \sigma_d \times \sqrt{L} \]
Where: - \( Z \) = Z-score representing the desired service level (e.g., 1.64 for 95% service level) - \( \sigma_d \) = Standard deviation of demand - \( L \) = Lead time