What is safety stock?

What is safety stock?

• A. Extra inventory kept to avoid stockouts.
• B. Inventory used to cushion vacation periods.
• C. Extra products held for promotional events.
• D. Inventory used to cover supplier delays for a month.

Answer: (A)

Safety stock is extra inventory kept beyond expected demand to guard against uncertainty in demand and supply. It acts as a cushion so you don’t run out of stock if sales turn out higher than forecast or if supplier lead times are longer than planned. This helps maintain service levels and prevent stockouts. It’s not specifically for vacation periods or promotional events, which describe different planning needs, and while it can help cover supplier delays, the core idea is a buffer for variability, not a fixed time frame.

Safety stock is extra inventory kept beyond expected demand to guard against uncertainty in demand and supply. It acts as a cushion so you don’t run out of stock if sales turn out higher than forecast or if supplier lead times are longer than planned. This helps maintain service levels and prevent stockouts. It’s not specifically for vacation periods or promotional events, which describe different planning needs, and while it can help cover supplier delays, the core idea is a buffer for variability, not a fixed time frame.