**** Abstract ****
A system composed of a supplier and buyer(s) is considered, where it is assumed that the supplier faces a known production lead time. The optimal delivery lead time is determined and its effect on the location of system safety stock is explored. It is shown that system safety stock should not be split between a buyer and supplier. Based on system parameters of shortage and holding costs, production lead times, and standard deviations of demand distributions, conditions indicating when the supplier or buyer(s) should keep the system safety stock are derived. The impact of changes to these parameters on the location of system safety stock is examined. For the case with multiple buyers, it is found that the supplier holds safety stock for the buyers with the smallest standard deviations, while the buyers with the largest standard deviations hold their own safety stock.