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What cash and safety stock could a shorter lead time release?
Separate pipeline inventory from the buffer change caused by shorter replenishment time.
Example scenario
Editable demonstration inputs, not verified industry benchmarks. Enable JavaScript to calculate your own scenario.
- Daily unit demand
- 500
- Daily demand standard deviation
- 100
- Current lead time
- 30 days
- Target lead time
- 15 days
- Safety-stock z-score
- 1.645 ×
- Cash cost / unit
- $15
- Annual supplier premium for shorter lead time
- $20,000
One-time inventory cash release
Example result only, not a forecast or promise.
- Pipeline units released
- 7,500
- Safety-stock units released
- 263.9
- Recurring annual supplier premium
- $20,000
What to do with this result
Only count pipeline inventory you fund or own. Compare the one-time cash release with recurring supplier premiums separately.
Know what is inside the model.
Planning model, not personalized financial advice. Your inputs remain in your browser.
Calculation method
Inventory units released = daily demand × lead-time reduction + z × demand sigma × (sqrt(old lead time) − sqrt(target lead time)).
Assumptions and limitations
- Example inputs are editable scenarios, not Aryo results or independently verified industry benchmarks.
- Demand, lead times and service levels are scenario inputs. Validate variability, physical constraints and supplier terms before ordering.