Safety stock is the margin of error required based on the customer service level and the deviation of the demand during the lead time. The safety stock coverage level is the z-value in standard statistics for calculating the confidence interval for a customer service level.
Safety Stock = Required Inventory Coverage Level * Standard Error of the Demand during the Lead time
Safety Stock = Required Inventory Coverage Level * RMSE * Square-root of (Lead time)
Safety Stock Coverage Values at various required Service Levels ©
