Safety-Stock Calculations Are Risky – Demand, Lead Time and Service Level
By Dave McPhetridge
This is a big and touchy topic, I know. I intend only to begin a dialog, not present an exhaustive treatise. First, let me define what I mean by “safety stock,” or SS: Not the restrictive, MRP-specific adder to gross requirements, but the general concept of buffer inventory. SS, determined correctly and optimally, protects against random variations in demand and supply, up to a desired fill rate.