What would be a good safety stock level?
Asked 7 months ago
I recently opened an e-commerce store, and I want to make sure that I am prepared for all the seasons to come. In the case where I have to stock up for any probable demand surge, I want to avoid any inaccurate market forecasts. How much extra stock should I get? I want to make sure I have a good safety stock level, but I'm worried I have either too little or too much.
Monday, March 21, 2022
Safety stock, in simple terms, means the extra stock or inventory held by the company or retailer in case of an unexpected rise in demand. The company keeps this additional stock to achieve customer satisfaction prevent issues like stockouts.
A good stock safety level depends on the company and the type of its operations. Consider the following factors when determining your stock safety level for your business:
- Consider delivery days of a vendor.
- Accessing your customer's daily consumption.
- Follow the 50% rule of safety stock.
- Decide your re-order point.
Thursday, September 15, 2022
Managing your safety stock well can help you reduce the number of unhappy customers, lost sales, and reduced engagement. The best way to use safety stock is in mutual connection with EOQ or Wilson formula. It helps you hold the stock while dealing with demand and lead time uncertainty. According to experts, any service level between 90% to 95% is ideal for a business. That means a 5% to 10% probability of stocking out is acceptable for any e-commerce store.
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