Safety stock

Demand and supply are never perfectly predictable. Safety stock absorbs that variability: a sudden rush, a supplier who ships late, or two orders landing on the last unit at once. Without a buffer, those normal events turn into overselling and orders you cannot fulfil.

The trade-off is a little tied-up inventory in exchange for not selling units you cannot ship, which is usually the more expensive mistake.

A practical starting point is lead time multiplied by daily sales: enough to keep selling while a reorder arrives. A product selling four a day with a five-day lead time needs roughly twenty units of buffer.

Raise it for unreliable suppliers or spiky demand, and lower it for slow, steady sellers. See how to set a safety stock level on Shopify.