However, this assumes that both the demand and the order lead time are perfectly predict able.
In most cases, of course, this is not so. Both demand and the order lead time are to vary to produce a profile which looks something like that in Figure 12.12.1n these circumstances it is necessary to make the replenishment order somewhat earlier than would be the case in a purely deterministic situation. This will result in, on average, some stock still being in the inventory when the replenishment order arrives. This is buffer (safety) stock. The earlier the replenishment order is placed, the higher will be the expected level of safety stock (s) when the replenishment order arrives. But because of the variability of both lead time (t and demand rate (d), there will sometimes be a higher-than-average level of safety stock and sometimes lower. The main consideration in setting safety stock is not so much the average level of stock when a replenishment order arrives but rather the probability that the stock will