Safety Stock - What is a good safety stock level?

Q: What is a good safety stock level?

The higher the desired service level, the more safety stock is required. The retail industry aims to maintain a typical service level of between 90% and 95%, although this does depend on the product being sold. As mentioned before, a higher service level is a risk as it increases the amount of stock being held.

Answer

The amount of safety stock needed increases as the intended service level rises. Depending on the product, the retail business strives for a typical service level of 90% to 95%. An rise in the amount of stock owned, as shown before, makes a greater service level riskier.

Safety Stock - What is a good safety stock level?

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