--- title: "What Is Safety Stock?" url: https://www.uncap.com/glossary/safety-stock author: "Denis Dyli" published: 2026-10-14 updated: 2026-10-28 summary: "Safety stock is extra inventory held on top of expected demand to keep operations running when demand fluctuates or normal replenishment is interrupted, for example when sales beat the forecast or a supplier delivers late. It is added to expected usage during the lead time to set the reorder point, the stock level that triggers a new order." --- # What Is Safety Stock? > Safety stock is extra inventory held on top of expected demand to keep operations running when demand fluctuates or normal replenishment is interrupted, for example when sales beat the forecast or a supplier delivers late. It is added to expected usage during the lead time to set the reorder point, the stock level that triggers a new order. **Safety stock**: Safety stock is extra inventory held on top of expected demand to keep operations running when demand fluctuates or normal replenishment is interrupted, for example when sales beat the forecast or a supplier delivers late. It is added to expected usage during the lead time to set the reorder point, the stock level that triggers a new order. ## How it works The US Department of Defense supply manual calls this buffer the safety level: the quantity of materiel required to be on hand to permit continued operation in the event of a minor interruption of normal replenishment or a fluctuation in demand. It adds that safety stocks should decrease as fluctuations in demand decrease. The main job of safety stock is to absorb the variability of customer demand, because plans are built on a forecast and a forecast differs from real demand. How much to hold is a trade-off: - Too much: high holding costs, and perishable goods can spoil if held as safety stock for too long. - Too little: a higher chance of running out, and a stockout can mean lost production, lost sales or both. The higher the service level you target, the more safety stock you need. The review policy matters too. If stock is checked periodically, say once a month, safety stock covers the risk over that period plus the replenishment lead time. If stock is monitored continuously, it covers only the replenishment lead time. Safety stock then feeds the [reorder point](/glossary/reorder-point): forecast usage during the [lead time](/glossary/lead-time) plus safety stock. ## How to calculate safety stock The Association of Chartered Certified Accountants (ACCA) names two common ways to size the buffer: a cost approach that finds the level where holding costs plus stockout costs are lowest, and a service level approach. The service level is the desired probability of meeting demand during the lead time without a stockout. A commonly used calculation: - Inputs: average demand per period and its standard deviation, average lead time and its standard deviation, and z, a factor read from the normal distribution for the service level (1.65 for 95%). - Formula: safety stock = z x the square root of (average lead time x demand variance + average demand squared x lead time variance). - Fixed lead time: when the lead time does not vary, this simplifies to z x the standard deviation of demand x the square root of the lead time. The method assumes demand in each period is an independent, normally distributed random value, and no universal formula exists for safety stock. ## Example Illustrative numbers only. A distributor sells an average of 40 cases a day of one SKU, with a standard deviation of 10 cases a day. The supplier's lead time is a steady 9 days, and the distributor targets a 95% service level, so z = 1.65. - Safety stock = 1.65 x 10 x the square root of 9 = 1.65 x 10 x 3 = 49.5, rounded up to 50 cases. - Demand during the lead time = 40 x 9 = 360 cases. - Reorder point = 360 + 50 = 410 cases. ## On Shopify In Shopify, safety stock is one of the reasons units sit in the Unavailable inventory state. Unavailable inventory is units set aside by apps or held for other reasons, such as damaged, quality control or safety stock: stocked at the location but not available to sell. On hand is the sum of committed, unavailable and available units, so safety stock counts as on hand but stays out of what buyers can order. Through the GraphQL Admin API, apps can move units between the available state and the reserved, damaged, safety_stock and quality_control states, and an app can put inventory it receives straight into Unavailable as safety stock. From October 1, 2026, Shopify's inventory reports measure stock by on hand rather than available, so those reports include units held as safety stock. For minimum and maximum stock levels used in transfers and purchase orders, Shopify suggests custom thresholds per variant set with custom metafield definitions. ## How Uncap helps Uncap's guide to [available to promise vs on hand](/post/available-to-promise-vs-on-hand) sets the rule for B2B storefronts: the number that crosses from the ERP to Shopify should already have every ERP-side commitment removed, including counter sales, rep and EDI orders, production allocations and safety stock. ## Related terms - Reorder point - Lead time - Available to promise (ATP) - Backorder - Warehouse management system (WMS) - EDI 846 ## Sources - DoD Manual 4140.01, Volume 2: Demand and Supply Planning - Safety stock, Wikipedia - Understanding inventory states, Shopify Help Center ## Frequently asked questions ### What is meant by safety stock? It is the quantity held on hand so operations continue through a minor interruption of normal replenishment or a fluctuation in demand. ### What is the formula for safety stock? A common service level method: z x the square root of (average lead time x demand variance + average demand squared x lead time variance). With a fixed lead time, z x demand standard deviation x the square root of the lead time. ### What is a good safety stock level? No universal formula sets it. One approach picks a target service level and sizes the buffer from demand and lead time variability; another finds the level where holding costs plus stockout costs are lowest.