Calculating Safety Stock: Protecting Against Stock Outs

The following video explains how to calculate safety stock in order to avoid the high costs of inventory shortages and stock-outs. The video explains inventory replenishment times, daily consumption, safety stock thresholds and levels, and your company’s own time to market in terms of delivery.
A graph is provided that clearly shows what the reorder point should be and what the safety stock levels should be.

A working example is provided where a company tracks a number of inventory replenishment times, their own daily consumption levels, the safety stock amount they need to cover during these consumption periods and then finally, your company’s delivery times for finished goods to your customer base.

http://www.driveyoursuccess.com Video provides four steps to calculate safety stock
Additional Sources: http://www.driveyoursuccess.com/2011/... This article outlines four steps to safety stock management