Safety stock calculation is a business process used to estimate the optimal amount of inventory to hold in order to protect against unplanned demand and supply fluctuations. This process requires input from both operational and financial perspectives in order to obtain an accurate assessment. The formula for safety stock calculation takes into account: the forecasted usage, lead time demand, the desired service level and the standard deviation of the demand. By applying this formula, businesses can ensure that customer needs are met without overstocking or understocking their inventory. At the end of the day, the goal is to maintain just enough supply to keep up with customer demand while avoiding costly losses due to stockouts or excessive inventories.