What is Safety Stock?
Safety Stock
Quantity always reserved in case supply is late or orders suddenly increase.
What it means
Safety stock is the amount left in the warehouse just in case, separate from the inventory for planning. Prepare your order before inventory falls below this quantity.
The more you have, the safer it is, but it also ties up money and space. The simplest starting point is to multiply the amount you use per day by the number of days your supply may be delayed.
At the pen factory
On day 9, the safety stock of black refill is set to 200 pieces. This is because we use about 100 pieces a day, and this time supply was two days late.
Why it matters
As long as the inventory is just right, the factory will shut down even if supply is delayed by just one day. Safety stock will get you through that day or two.