The buffer inventory you hold above expected demand so a demand spike or a late shipment does not become a stock-out. The simplified formula: (maximum daily sales x maximum lead time) minus (average daily sales x average lead time); add it to expected lead-time demand and you have your reorder point. Simple, but do not underestimate it - this basic approach ran Quad Lock from launch to around $100M in revenue with very few stock-outs while tying up only 8-13% of revenue in inventory. The mistake is protecting every SKU equally: your A-items earn tight safety stock and attention, your C-items can run lean and occasionally stock out.
Benchmark. The sweet spot is enough stock to never miss a sale without locking cash in a warehouse - Quad Lock ran 8-13% of revenue in inventory. Apply the formula to hero SKUs first, and remember it is only as good as your stock count.