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Retail Supply Chain lesson

Safety stock

Sales and deliveries vary. Safety stock is extra cover on top of the reorder point, here 2 weeks of sales.

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About 5–10 minutes · no sign-up needed

The idea

Sales and deliveries vary. Safety stock is extra cover on top of the reorder point, here 2 weeks of sales:

Formulas

Weekly sales × ( Lead time + 2 )

Key points

Safety stockWeekly sales × Safety weeks. Here, 2 weeks.
Reorder pointWeekly sales × (Lead time + Safety weeks).
The trade-offMore safety stock means fewer stock-outs, but more cash tied up.

Hold more safety stock for products that sell unevenly or come from slow, unreliable suppliers.

Practice

Try each one in your head first, then open the answer.

1. How much safety stock should the UK hold, at 2 weeks of sales?
300 × 2 = 600 units
2. What's Canada's reorder point with 2 weeks of safety stock?
150 × (5 + 2) = 1,050 units
3. Why keep safety stock at all?
Sales and delivery times vary, so it protects availability

Learn it by doing. This lesson is a short hands-on level on Bampaa: see it work, then build and write it yourself, with instant feedback.

Try this lesson free →
About 5–10 minutes · no sign-up needed