Safety stock management based on lead time optimization

Efficient resources allocation is very important to the success of a company. Optimization of lead time is one of the key ways of time optimization. The paper analyzes the relationship between lead time and the safety stock, and establishes a function on the basis of such relationship. Based on mathematical analysis, the controlled optimal safety stock strategies are presented by controlling of lead time. The paper provides some measurements to reduce lead time including improvement on logistics process, the adoption of postponement strategy, the employment of QR and CPFR, and making full use of information technology, to achieve a lower safety stock and higher service level.