Units of safety stock are additions to the reorder point that allow for variability in the rate of demand, the length of lead time, or both.

Question

Quizplus · Accepted Answer

Safety stock is a common method used to ensure that a company will have enough inventory on hand to meet demand even if there are fluctuations in demand or unexpected delays in the supply chain. By adding a certain number of units to the reorder point, a company can better manage the risks associated with supply chain disruptions and unexpected changes in demand. Therefore, the given statement is true.

Units of Safety Stock Are Additions to the Reorder Point