# M3 Safety Stock and Reorder Point Calculator

> Source: https://netray.co/tools/m3-safety-stock-reorder-point-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Work out statistically sound safety stock and reorder point values before you key them into the M3 item/warehouse planning parameters.

## Category

infor-cloudsuite

## Erp

Infor M3

## Audience

- M3 consultant
- Demand planner
- Inventory controller

## Tool

**Kind:** calculator

**Inputs:**

#### Average daily demand

**Key:** avg_daily

**Type:** number

**Default:** 120

**Min:** 0

**Step:** 5

**Unit:** units/day

**Help:** Mean demand per day over a representative history window.

#### Std deviation of daily demand

**Key:** sd_daily

**Type:** number

**Default:** 35

**Min:** 0

**Step:** 1

**Unit:** units

**Help:** Standard deviation of daily demand over the same window.

#### Replenishment lead time

**Key:** lead_time

**Type:** slider

**Default:** 14

**Min:** 1

**Max:** 120

**Step:** 1

**Unit:** days

**Help:** Calendar or working days, but use the same basis as your daily demand.

#### Std deviation of lead time

**Key:** lt_sd

**Type:** number

**Default:** 3

**Min:** 0

**Step:** 0.5

**Unit:** days

**Help:** How much supplier lead time varies. Use 0 for a fixed lead time.

#### Target cycle service level

**Key:** service

**Type:** select

**Default:** 0.95

**Options:**

##### 90%

**Value:** 0.9

##### 95%

**Value:** 0.95

##### 97.5%

**Value:** 0.975

##### 99%

**Value:** 0.99

#### Unit cost

**Key:** unit_cost

**Type:** number

**Default:** 18.5

**Min:** 0

**Step:** 0.5

**Unit:** $

**Help:** Used to value the safety stock investment.

**Outputs:**

#### Service factor (z)

**Key:** z

**Expr:** normsinv(service)

**Format:** decimal

**Description:** Standard normal quantile for the chosen service level.

#### Expected demand during lead time

**Key:** demand_lt

**Expr:** avg_daily * lead_time

**Format:** integer

#### Safety stock

**Key:** ss

**Expr:** z * sqrt(lead_time * pow(sd_daily, 2) + pow(avg_daily, 2) * pow(lt_sd, 2))

**Format:** integer

**Primary:** true

**Description:** Covers both demand and lead time variability.

#### Reorder point

**Key:** rop

**Expr:** demand_lt + ss

**Format:** integer

**Primary:** true

#### Safety stock value

**Key:** ss_value

**Expr:** ss * unit_cost

**Format:** currency

**Chart:**

#### Safety stock and reorder point vs lead time

**Type:** line

**X:** lead_time

**From:** 1

**To:** 60

**Steps:** 30

**Series:**

- ss
- rop

**Disclaimer:** Assumes roughly normal demand and independent lead time variation. Intermittent or lumpy items need a different method. Validate against your own history before changing planning parameters.

## Content

**Intro:** Safety stock and reorder point are the two numbers most M3 inventory problems come back to. This calculator combines demand variability and lead time variability into one defensible figure you can discuss with planners before changing item/warehouse parameters.

**Sections:**

#### How to use the calculator

**Body:** Pull a few months of daily or weekly issue history for the item and warehouse from your M3 reporting, then compute the mean and standard deviation outside M3 or in a spreadsheet. Enter them with the supplier lead time and its variation, pick a service level, and read off the safety stock and reorder point. Keep demand and lead time in the same time unit. If you work in weeks, enter weekly demand and a lead time in weeks, and the result is in the same weekly basis. Use the chart to see how fast the buffer grows as lead time stretches.

**Bullets:**

- Use the same time unit for demand and lead time
- Exclude one-off spikes you would not plan for
- Run it per item and warehouse, not per item family
- Re-run after any supplier change

#### The formula behind it

**Body:** Safety stock equals z times the square root of (lead time x demand variance + average demand squared x lead time variance). The z value comes from the inverse normal distribution at your chosen cycle service level, so 95% gives about 1.645 and 99% about 2.326. Reorder point is expected demand over the lead time plus safety stock. When lead time is fixed, the second term vanishes and the familiar z x sigma x sqrt(lead time) remains.

#### Reading the result

**Body:** Compare the output with what is currently held in the item/warehouse planning parameters. A large gap in either direction is a conversation starter, not an instruction. If the calculated safety stock is much higher, check whether lead time variability or one noisy demand month is driving it. If it is much lower, ask whether the current buffer is protecting against something the history does not show, such as single-source risk or long-haul transit.

**Bullets:**

- Raising the service level from 95% to 99% raises z by about 40%
- Halving lead time variability often saves more than lowering the service target
- Value the stock to show the cost of each service step

#### Common mistakes

**Body:** The most frequent error is mixing units, for example daily demand with a lead time in weeks. The second is using the standard deviation of monthly demand as if it were daily. Third is applying one safety stock policy to every item regardless of ABC class. Finally, remember that planning in M3 also depends on how order policies and time fences are set, so a correct buffer can still be undone by a poor order quantity rule.

**Cta:** If you want these figures calculated automatically from your M3 issue history and compared with live parameters, Netray can help set that up on top of your data, read-only.

**Faq:**

#### Does this replace the planning logic inside M3?

**Answer:** No. It helps you decide what values to enter into the planning parameters. M3 still runs its own planning using whatever values are configured, so treat this as an input to the decision, not a substitute for the system.

#### Which service level should I choose?

**Answer:** Start with 95% for ordinary items and go higher for critical or high margin items. Each step up costs more stock, so use the safety stock value output to price the trade-off with the business before committing.

#### What if my lead time never varies?

**Answer:** Set the lead time standard deviation to 0. The formula then reduces to the classic z x sigma x square root of lead time, which is the right form for a perfectly reliable supplier.

#### Can I use weekly data?

**Answer:** Yes. Enter weekly average demand, weekly standard deviation and lead time in weeks. The outputs are then in units over a weekly basis, which is consistent as long as every input shares the same unit.

## Search terms

m3 safety stock calculator, infor m3 reorder point, m3 item warehouse planning parameters, safety stock formula lead time variability, m3 mms002 safety stock, reorder point calculator excel, infor m3 inventory planning

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