Inventory Turnover & Safety Stock Calculator
Calculate Economic Order Quantity (EOQ), Reorder Point (ROP), and Safety Stock to optimize inventory levels and cash flow.
About
Inventory is money sitting on a shelf. Optimizing it requires balancing the risk of stockouts (lost sales) against the cost of holding excess stock (storage, insurance, obsolescence). This tool calculates the "Sweet Spot" for ordering.
It computes the Economic Order Quantity (EOQ) to minimize total costs and establishes a data-driven Reorder Point (ROP). Crucially, it calculates Safety Stock based on your desired Service Level - typically 95% to 99%. This buffer protects against supply chain disruptions and unexpected demand spikes.
Formulas
Economic Order Quantity (EOQ):
Where D is Annual Demand, S is Ordering Cost, and H is Holding Cost.
Reorder Point (ROP):
Safety Stock uses the Z-score (Z) and standard deviation of demand (σd) over the lead time.
Reference Data
| Service Level | Z-Score | Stockout Risk | Recommended For |
|---|---|---|---|
| 90% | 1.28 | 10% | Low margin, non-critical items |
| 95% | 1.65 | 5% | Standard retail products |
| 97.5% | 1.96 | 2.5% | High demand, competitive items |
| 99% | 2.33 | 1% | Critical parts, medical supplies |
| 99.9% | 3.09 | 0.1% | Life-saving equipment |