Safety stock is the buffer quantity held against demand swings and supply delays. It is set by the volatility of sales and the uncertainty of the lead time, not by average sales. Calculated wrongly, either cash is locked up on the shelf or the product runs out on campaign day.
Overstate the safety stock and cash is tied up on the shelf; understate it and sales and marketplace ranking are lost in the busy period. In Turkey, customs and freight delays on supply from China and Europe make the lead time unpredictable; that is why the buffer is kept higher on imported items than on domestic supply. The right method is to separate products by their place in the ABC analysis and keep the buffer wide only on the items that carry the revenue. On products being advertised, the buffer should always be higher.
Safety stock ≈ (Peak daily sales − Average daily sales) × Lead time (days)
With average daily sales of 20, peak sales of 35 and a 12-day lead time, the buffer is (35 − 20) × 12 = 180 units.
Overstate the safety stock and cash is tied up on the shelf; understate it and sales and marketplace ranking are lost in the busy period. In Turkey, customs and freight delays on supply from China and Europe make the lead time unpredictable; that is why the buffer is kept higher on imported items than on domestic suppl…
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