extra units of inventory carried as protection against possible stockouts. The safety stock must be carried when the firm is not sure about either the demand for the product or lead time or both. In the case where demand is uncertain, safety stock is the difference between the maximum usage and the average usage multiplied by the lead time. For example, assume that a store is faced with an uncertain usage for its baseballs. Lead time is constant at two weeks. Normal weekly usage is 700 dozen but it can go as high as 850 dozen. The store would compute the safety stock as follows:

Maximum weekly usage                                        850 dozen
Average weekly usage                               700
Excess           

                                                               150
Lead time                                                           x 2 weeks
Safety stock                                                       300 dozen