Glossary
Safety Stock
Safety stock is extra inventory held to protect against variability in demand and supply lead times.
Full explanation
Stocklyst calculates safety stock using the Graves 1999 combined variability formula, which accounts for both demand uncertainty and lead time uncertainty simultaneously. Unlike rule-of-thumb approaches that use fixed percentages or simple averages, the Graves formula produces a statistically grounded buffer that adapts to each item’s specific demand pattern and supplier reliability.
The formula is: SS = z × √(LT × σ²_d + d² × σ²_LT), where z is the service level factor, LT is average lead time, σ_d is demand standard deviation, d is average demand, and σ_LT is lead time standard deviation. This approach ensures that items with high demand variability or unreliable suppliers receive proportionally larger safety buffers without manual intervention.
Formula
SS = z × √(LT × σ²_d + d² × σ²_LT)How Stocklyst handles this
Stocklyst computes safety stock automatically for every item at every branch using the Graves 1999 formula. The calculation adapts to each item’s demand classification (Syntetos-Boylan 2005), applying higher safety factors for intermittent and lumpy demand patterns. No manual thresholds are required.
Put safety stock management on autopilot
Stocklyst calculates stock levels automatically using research-backed formulas, so you can focus on running your business instead of managing spreadsheets.
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