<P> Safety stocks are mainly used in a "Make To Stock" manufacturing strategy . This strategy is employed when the lead time of manufacturing is too long to satisfy the customer demand at the right cost / quality / waiting time . </P> <P> The main goal of safety stocks is to absorb the variability of customer demand . Indeed, Production Planning is based on a forecast, which is (by definition) different from the real demand . By absorbing these variations, safety stock improves the customer service level . </P> <P> Creating a safety stock will also prevent stock - outs from other variations, like an upward trend in customer demand . </P> <P> Safety stock is used as a buffer to protect organizations from stockouts caused by inaccurate planning or poor schedule adherence by suppliers . As such, its cost (in both material and management) is often seen as a drain on financial resources that results in reduction initiatives . In addition, time - sensitive goods such as food, drink, and other perishable items could spoil and go to waste if held as safety stock for too long . Various methods exist to reduce safety stock: these include better use of technology, increased collaboration with suppliers, and more accurate forecasting . In a lean supply environment, lead times are reduced, which can help minimize safety stock levels, thus reducing the likelihood and impact of stockouts . Due to the cost of safety stock, many organizations opt for a service level - led safety stock calculation; for example, a 95% service level could result in stockouts, but is at a level that is acceptable to the company . The lower the service level, the lower the requirement for safety stock . </P>

If there is no variation in demand or lead time the safety stock required is