GLOSSARY · UPDATED OCT 20, 2026
What is safety stock, and what is the safety stock formula?
Safety stock is the extra inventory you hold to cover the days when sales run faster than average, or deliveries run slower, during your lead time. The standard safety stock formula is Z × the standard deviation of daily sales × the square root of lead time in days. For a 95% service level, Z is 1.65, not 1.96.
The safety stock formula and Z values
- Demand only:
safety stock = Z × σd × √L
- Demand and lead time both vary:
safety stock = Z × √(L × σd² + d² × σL²)
Here d is average daily units, σd the standard deviation of daily units, L the average lead time in days and σL the standard deviation of lead time in days.
| Service level (chance of not running out during lead time) | Z |
|---|---|
| 90% | 1.28 |
| 95% | 1.65 |
| 97.5% | 1.96 |
| 99% | 2.33 |
These are one-sided values from the standard normal table (NIST/SEMATECH e-Handbook). Safety stock only protects against the high side of demand, so the one-sided value is the right one. Some calculators use 1.96 for 95%, which is the two-sided value and overstates the stock you need.
Worked example
Illustrative · sample figures. A SKU sells 20 units a day with a standard deviation of 6. Lead time is 62 days: 30 days of production, 25 in transit and 7 for FBA, WFS or your 3PL to receive and check in.
| Case | Calculation | Safety stock |
|---|---|---|
| 95%, demand only | 1.65 × 6 × √62 (7.87) | about 78 units |
| 95%, using 1.96 by mistake | 1.96 × 6 × 7.87 | about 93 units |
| 99%, demand only | 2.33 × 6 × 7.87 | about 110 units |
| 95%, lead time varies by 5 days | 1.65 × √(62 × 36 + 400 × 25) = 1.65 × 110.6 | about 183 units |
The last row is the one most owners miss. A supplier or ocean leg that is late by about five days now and then needs more than twice the safety stock of steady demand alone, because every late day is 20 units. If your inbound dates slip, measure how much, and use the second formula.
Safety stock feeds the reorder point: average daily units × lead time + safety stock, here 1,240 + 78 = 1,318 units. The reorder point calculator runs both with your numbers.
How safety stock works on Amazon, Walmart and Shopify
Amazon.
Treat safety stock at FBA and safety stock at your warehouse separately. Lead time to FBA includes receiving, which varies by site and season. Running too lean has a fee as well as a stockout risk: Amazon charges the low-inventory-level fee only when both your 30-day and 90-day historical days of supply are below 28 days (Amazon staff, Seller Forums). A safety stock that keeps days of supply at FBA above 28 on steady sellers avoids it. Exemptions and current amounts are on your Seller Central fee pages; our low-inventory fee guide explains them.
Walmart.
Walmart's WFS fee page lists no low-inventory fee, but over-holding costs more there now. Since Jun 30, 2026, WFS inventory stored 366 to 450 days costs $2.25 per cubic foot a month and $7.50 after 450 days (Walmart, updated May 27, 2026). Keep safety stock high on fast movers, not on the whole catalog.
Shopify.
Safety stock sits at your 3PL or warehouse. If you sell the same units on Amazon, Walmart and Shopify, hold one safety stock against combined demand and set channel buffers on top, so one channel's spike does not cancel another's orders.
Common mistakes
-
Using 1.96 for 95%.
It is the two-sided value. Use 1.65.
-
Measuring variation on days you were out of stock.
Zero-sale days make demand look more volatile and inflate safety stock. Drop them.
-
Ignoring lead-time variation.
Late freight is often a bigger risk than a busy week.
-
One number for the whole year.
Recalculate before Q4, when sales and receiving times both rise.
-
Same service level for every SKU.
Hold 97.5% or 99% on top sellers and 90% on the tail.
What is the Z value for a 95% service level?
1.65 (1.645 to three places), from the one-sided standard normal table. It means a 95% chance of not running out during one lead time. The 1.96 figure that some calculators show is the two-sided value and adds stock you do not need.
How much safety stock should an Amazon seller keep?
Enough to cover demand above average during the full lead time to FBA, including receiving, at the service level you choose for that SKU. On steady sellers, also keep FBA days of supply above 28, because the low-inventory-level fee applies when both 30-day and 90-day historical days of supply fall below it.
What service level should I choose?
Higher for products that rank, sell daily and lose shoppers to rivals when out of stock; lower for slow or seasonal items. In a global study, 31% of shoppers facing an out-of-stock bought at another store and 26% switched brand (FMI and GMA, Oct 14, 2002). Weigh that against storage cost.
Is safety stock the same as the reorder point?
No. Safety stock is the buffer. The reorder point is the level at which you place the next order: expected demand during lead time plus safety stock. You reorder at the reorder point and hope never to use the safety stock.
What is the simple method?
Maximum daily units × maximum lead time − average daily units × average lead time. It needs no statistics but tends to overstate stock, because it assumes the worst day and the slowest delivery happen together.
Can you set this up for us?
Yes. Stock Flow builds safety stock and reorder alerts per SKU and location in your own accounts, and our inventory and 3PL management runs the reorder work daily. Prices are on pricing.
Sources4 sourcesLast checked Oct 20, 2026
- 01itl.nist.govNIST/SEMATECH e-Handbook, critical values of the normal distribution: 1.282, 1.645, 1.960, 2.326; checked Oct 20, 2026Primary
- 02fmi.org31% buy elsewhere, 26% switch brand, 9% buy nothing; Oct 14, 2002; checked Oct 20, 2026Primary
- 03sellercentral.amazon.comAmazon staff, "Low-inventory-level fee further explained": fee only when both 30-day and 90-day historical days of supply are below 28 days; about 2023; checked Oct 20, 2026Primary
- 04marketplacelearn.walmart.comlong-term storage from Jun 30, 2026; updated May 27, 2026; checked Oct 20, 2026Primary
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