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 these

Question

Quizplus · Accepted Answer

Safety stock refers to the additional inventory kept on hand to cover unexpected increases in demand or supply chain disruptions. It is a form of current asset and helps to ensure that a company can meet customer demand even during uncertain times. Options A and B are incorrect as they refer to fixed assets and accruals respectively, which are not related to safety stock. Option D is incorrect as one of the options is correct.

Safety Stock Is Referred to as the ________________