Safety Stock
Buffer inventory held above expected demand to absorb demand variability and lead-time variability.
Safety Stock is the inventory buffer you hold above expected demand to protect against two kinds of variance: demand variance (some weeks sell more than the average) and lead time variance (some shipments arrive later than expected). Without safety stock, even perfect average forecasts produce stockouts about half the time because half your weeks are above average.
The simple safety stock formula is safety stock = Z × σ × √(lead time) where Z is the desired service level (1.65 for 95% in-stock probability, 2.33 for 99%), σ is the standard deviation of daily demand, and lead time is in days. In practice most operators don't bother with the formula and instead pick a number of "safety days" by feel — 7 days for stable SKUs, 14-21 days for volatile ones.
Safety stock is a trade-off: more safety stock means fewer stockouts but more storage cost, capacity consumption, and capital tied up. SellerVault's Monte Carlo forecasts produce probabilistic distributions per SKU, so you can pick a target service level (95%, 99%) and the engine derives the right safety stock from actual demand variance — instead of using a flat 14-day buffer across the catalog.