Archives inventory - OpenForecast https://openforecast.org/tag/inventory/ How to look into the future Tue, 18 Aug 2026 13:40:20 +0000 en-GB hourly 1 https://wordpress.org/?v=7.0.4 https://openforecast.org/wp-content/webpc-passthru.php?src=https://openforecast.org/wp-content/uploads/2026/07/cropped-of-logo-short-1-32x32.png&nocache=1 Archives inventory - OpenForecast https://openforecast.org/tag/inventory/ 32 32 Five things that determine your safety stock https://openforecast.org/2026/08/18/five-things-that-determine-your-safety-stock/ https://openforecast.org/2026/08/18/five-things-that-determine-your-safety-stock/#respond Tue, 18 Aug 2026 13:40:20 +0000 https://openforecast.org/?p=4573 One of the most common questions we get from companies is “How much safety stock should we hold?” Companies usually want simple solutions, but the honest answer is that there is no universal number and no universal formula – depending on what you sell, how often you sell, how your operations are setup etc, you ... Read more

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]]> One of the most common questions we get from companies is “How much safety stock should we hold?” Companies usually want simple solutions, but the honest answer is that there is no universal number and no universal formula – depending on what you sell, how often you sell, how your operations are setup etc, you will get a different optimal solution. But that does not mean that the answer to this question does not have a structure. Whatever your product and industry is, the answer is always shaped by the same five elements:

  1. the forecast,
  2. the variability of sales,
  3. the target service level,
  4. the lead time,
  5. and the assumed demand distribution.

Get any of them wrong, and you either overstock or end up with stockouts.

I have written up a longer answer to this question, explaining how these five elements impact the safety stock formula, and provided a short example of an abstract calculation for an FMCG product.

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