Safety stock is:
A) extra quantity of goods above what is known to be produced by the supplier
B) extra quantity of goods below what is known to be needed to meet sales or production.
C) extra quantity of goods above what is known to be the economic order quantity.
D) extra quantity of goods above what is known to be needed to meet sales or production.

Question

Quizplus · Accepted Answer

Safety stock is defined as extra quantity of goods above what is known to be needed to meet sales or production. This extra inventory acts as a buffer against unexpected fluctuations in demand or supply chain interruptions. It ensures that the company has sufficient stock on hand to avoid stockouts and meet customer demand. It is calculated based on factors such as lead time, demand variability, and service level targets.

Safety Stock Is