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Reorder Points & Safety Stock
Compute a reorder point and safety stock from lead time, demand, and a service level.
Inside this lesson
- Define the reorder point and explain each term in its formula.
- Calculate safety stock from the demand standard deviation, lead time, and service level.
- Relate a higher service level to a larger z factor and more safety stock.
- Trace how safety stock raises carrying cost while reducing stockout risk.
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Educational training content only - not legal, financial, customs, or professional advice, and not a promise of any operational or business result. Examples are illustrative and use hypothetical data with stated assumptions and units. Trade-term and regulatory context is general and jurisdiction-neutral; always confirm current rules with a qualified source. Third-party names are descriptive and imply no affiliation.