Safety stock is referred to as the
A) excess amounts of fixed assets kept on hand to meet unexpected shocks in demand.
B) excess amounts of accruals used to fund short-term demands for cash.
C) excess amounts of a current asset kept on hand to meet unexpected shocks in demand.
D) none of the options.

Question

Quizplus · Accepted Answer

Safety stock is essentially the additional quantity of an item held in the inventory in order to reduce the risk that the item will be out of stock. It acts as a buffer against unexpected increases in demand or delays in supply, making option C the correct choice as it accurately describes safety stock as excess amounts of a current asset (inventory) kept on hand to meet unexpected shocks in demand.

Safety Stock Is Referred to as the