Safety stock is the level of stock kept above the strictly necessary to absorb variability — in demand (days when more than the average is sold), in supply (days when the supplier delivers late or incomplete), and in quality (parts received with defects). Without safety stock, any fluctuation causes a stockout; with excessive safety stock, capital is unnecessarily tied up.
The optimal safety-stock calculation uses statistical formulas that consider observed variability (demand standard deviation, lead-time standard deviation) and the desired service level (the probability of not having a stockout). For a series with a 98% service level, safety stock is higher than for 90%. Each extra percentage point costs additional stock — the decision is pure economics.
The MRP in the MULTI ERP considers configurable safety stock per article. For companies with analytical maturity, MyBusiness-ITV analyses observed variability per article/supplier and suggests safety-stock levels aligned with a target service level. Periodic review (quarterly or monthly) is important — safety stock configured once and forgotten typically ends up misaligned over time.