# To maintain safe order level from a customer

A telecommunication company (CALLME TEL Co., Ltd) receives and processes customers’ orders.

Orange Co., Ltd is an important customer, who mostly places orders every 2 months. Medium quantity of successful order in the “shall-placing-order-month” total is 500 units. (occasionally it also places small number of orders every month)

(the Orders came in different days in the “shall-placing-order-month”, for various phone models of different quantities. The total successful quantity of all models sums to about 500 units in the month)

Because of different reasons (delivery, stock, pricing, etc.), the order success rate remains on 30%.

From an order received from Orange, to the order is confirmed as successful, it takes 5 to 60 days (depends on processing time of individual orders).

As the customer Orange may place orders to CALLME’s competitors too. CALLME’s manager wants to detect if the orders came from Orange is declining early.

CALLME’s manager thinks, CALLME shall maintain a safe order level from Orange (orders being progressed).

How to calculate the safe order level? (any other information required for the calculation)

• Would you please, give a simple example of what you are looking for? Commented Feb 26, 2023 at 9:07
• @ A.Omidi, thank you for the kind comment. Above is a real case I have in my work - the company wants to know what's the quantity of order in hand, to get to know the customer is taking our company as the main supplier (i.e. if the quantity of orders in our hand drops to certain level, it may indicate the customer is shifting the purchase to other supplier(s). Sutanu's reply below is inspiring. I just need more time to understand it before next follow-up. Commented Feb 27, 2023 at 1:30

Safety stock =$$z\sqrt{L_{\mu}^2D_{\sigma}^2+ L_{\sigma}^2D_{\mu}^2 }$$
where $$z$$ is z-score for service level (your case is 70%) and L is lead time, D is demand indexed by $$\mu$$: average lead time/average demand and $$\sigma^2$$ is their corresponding variance.