What is the formula for the minimum supply level?

The formula for the minimum supply level is understood as the amount of inventory necessary to ensure that operations can continue smoothly during the lead time of reordering supplies. Safety stock serves as a buffer against variability in demand and lead time, ensuring that there is enough inventory on hand to meet unexpected increases in usage or delays in replenishment.

By incorporating lead time into the formula with safety stock, the result provides a comprehensive view of the minimum inventory required to maintain operations reliably. This combination allows for a calculated approach to avoid stockouts, particularly during periods of uncertainty regarding supplier delivery times or fluctuations in customer demand.

This reasoning emphasizes the importance of maintaining a safety buffer, making the correct formula evident.