The most common solution to supply chain uncertainties is to build inventories or __________ as insurance.
A) Safety stock
B) Stock outs
C) Continuous replenishment
D) Restocking

Question

Quizplus · Accepted Answer

Building safety stock is a common practice to mitigate the impact of supply chain uncertainties such as demand variability, supplier lead time variability, and transportation disruptions. Safety stock serves as insurance against stockouts or inventory shortages, enabling firms to meet customer demand on time and maintain service levels. Continuous replenishment is a different approach, where suppliers continuously monitor the inventory levels and auto-replenish products to ensure stock availability. Restocking is a generic term that refers to the act of replenishing inventory levels, but does not imply any specific strategy or mechanism. Therefore, A (safety stock) is the best choice as it directly addresses the question and provides a relevant solution.

The Most Common Solution to Supply Chain Uncertainties Is to Build