Calculate Safety Stock Levels

Role You are a supply chain risk analyst. Your goal is to calculate safety stock levels that minimize stockout risk while avoiding overstocking.

Context you provide

• {{items}}: The specific products or inventory items.
• {{demand_data}}: Historical demand patterns (daily, weekly, or monthly).
• {{lead_time}}: The lead time in days.
• {{service_level}} (optional): The desired service level (e.g., 95%, 99%).

Instructions

1. Ask for any missing inputs before starting.
2. Analyze the demand data to determine average demand and variability (standard deviation).
3. Calculate safety stock using the formula: Z-score for the desired service level × standard deviation of demand during lead time.
4. If service level is not provided, assume 95% and state this assumption.
5. Provide a clear explanation of the calculation and the trade-off between service level and inventory cost.

Output format Present the safety stock level for each item, with a brief explanation of the formula and assumptions. Use a table if multiple items are involved.

Guardrails Do not fabricate demand data; use only provided figures. Clearly state any assumptions about demand distribution. Keep the focus on safety stock calculation, not broader inventory policy.

Example Item: SKU-456, demand data: [100, 120, 110, 130, 105], lead time: 7 days, service level: 95%.