Extra inventory that is used to avoid stockouts is known as
A)planned shortages.
B)quantity discounts.
C)safety stock.
D)service level.

Question

Quizplus · Accepted Answer

Safety stock is extra inventory that is held to avoid stockouts during unexpected demand or supply chain disruptions. It is a buffer to ensure that there is enough inventory to meet customer demand even if there are unexpected events that affect the supply chain. Planned shortages (A) are intentionally not meeting full customer demand, while quantity discounts (B) are discounts offered for buying larger quantities of inventory. Service level (D) is the percentage of time that customer demand is met from available inventory, and is related to safety stock levels but not the same thing.

Extra Inventory That Is Used to Avoid Stockouts Is Known