Glossary · Planning
What is Standard deviation (of demand)?
The standard deviation of demand measures how far daily or weekly sales typically stray from their average.
A product that sells 20 a day, always between 18 and 22, has a small standard deviation. One that swings between 2 and 60 has a large one and needs a bigger safety buffer.
Use the same time unit throughout a calculation: daily demand with daily standard deviation, or weekly with weekly. Remove stockout days from the history first, or the figure comes out too low.
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