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Safety stock

Stock kept on top of what you expect to sell while you wait for a delivery, to cover busy days and late suppliers.

Safety stock is the cushion. If you sell about 10 a day and a delivery takes 5 days, you need 50 to get through the wait. Safety stock is what you keep beyond that, because some weeks sell more than others and some deliveries come late.

A simple way to set it: take your busiest sales during a delivery wait and subtract the usual. Too little and you run out; too much ties up money and space. Safety stock is part of the reorder point.

Related terms

Reorder pointEconomic order quantity (EOQ)All terms

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