Use simulation to size safety stock by testing many demand and lead-time outcomes against your service-level goal.
Traditional formulas (like safety stock based on Normal distribution) assume demand is stable and predictable. In reality, demand is uncertain, which makes simulation the best way to size safety stock.
Safety stock = (Service Factor) × (Standard Deviation of Demand) × (√Lead Time).
Works well in textbooks, often fails in the real world.
A parts distributor found that formula-based safety stock caused overstock of stable items and stockouts of slow movers. Simulation reallocated buffers, cutting working capital by 12% and improving fill rates.
Don’t just calculate safety stock. Test it under uncertainty. Simulation is how you know if your safety stock is really right-sized.
Set up a call with one of our team and we’ll walk you through a demo, identify trouble spots in your business, and see how implementing RSI can transform your business through data-driven inventory optimization.
