Safety stock is a buffer of inventory kept above expected demand. It protects against sales that run higher than forecast and against supplier delays that stretch the lead time.
The amount depends on how variable demand and lead times are, and on how costly a stock-out would be. A common approach looks at the typical spread between forecast and actual sales over the lead time. Items with steady sales and reliable suppliers need little; erratic or imported items need more.
Retailers add safety stock to the reorder point so orders are placed earlier. Hospitality operators hold a smaller version for key ingredients, though perishables limit how much buffer is sensible. Critical consumables like packaging or receipt paper are often buffered because running out stops trading.
The cost of safety stock is money tied up and, for perishables or fashion, a risk of waste or markdowns. Holding a large buffer on everything hides poor forecasting rather than fixing it. Review it by item, and cut it where supplier performance has improved.
Used selectively, safety stock keeps best-sellers available during uncertainty. It is a trade-off between lost sales and carrying cost, not a blanket rule. Perishable and short-life items usually need the smallest buffers for exactly this reason.