How do I calculate safety stock for my inventory?
An example of an AI chatbot conversation about calculating safety stock for inventory management.
How do I calculate safety stock for my inventory?
To calculate safety stock, you can use the formula: Safety Stock = Z * σLT, where Z is the Z-score for your desired service level and σLT is the standard deviation of lead time demand.
What is the Z-score for a 95% service level?
The Z-score for a 95% service level is approximately 1.65.
Can you give me an example with numbers?
Sure! If your average lead time demand is 100 units and the standard deviation is 20 units, Safety Stock = 1.65 * 20 = 33 units.
How often should I review my safety stock levels?
It's recommended to review your safety stock levels regularly, at least quarterly, or whenever there are significant changes in demand or lead time.
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