Calculating Safety Stock Based on Lead Time and Demand Variability

Calculating Safety Stock Based on Lead Time and Demand Variability

📄 Prompt Template

To calculate the appropriate safety stock for [CompanyName]'s product [ProductName], analyze historical demand data and lead time variability. First, gather historical sales data for the past [TimePeriod] and compute the average demand and standard deviation. Next, determine the lead time variability by examining the lead time distribution over the same [TimePeriod]. Use the formula: Safety Stock = Z * √(LeadTime * DemandVariance), where Z represents the desired service level. Ensure that the Z value corresponds to the [ServiceLevelTarget]. Provide the calculated safety stock level for each product in your inventory to ensure optimal stock levels.

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