Safety Stock
Safety stock = z · σ · √L - how many spares to carry above expected demand to cover lead-time demand variability.
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Formula, assumptions, and limits
| Symbol | Meaning | Unit |
|---|---|---|
| Normal-quantile for service level | ||
| Demand volatility | units / period | |
| Lead time | periods |
Source: IACS UR Z18 - Critical equipment and spares
In short
Safety stock = z \u00b7 \u03c3 \u00b7 \u221aL - how many spares to carry above expected demand to cover lead-time demand variability.