A retailer that sells 10-pound bags of senior dog food has found that some weeks he sells thirty 10-pound bags and other weeks he sells none.A reorder can take up to three weeks.The probability of running out of that size bag of dog food and alienating his customers can be alleviated by maintaining:

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Safety stock is the amount of extra inventory that is kept to mitigate the risk of running out of stock due to unexpected fluctuations in demand or supply. In this case, the retailer can maintain safety stock to avoid stockouts and ensure that customers can purchase the 10-pound bags of senior dog food even during weeks when demand is higher than expected or supply is disrupted. The lead time of three weeks for a reorder also highlights the need for safety stock to cover any unexpected shortages during this period.

A Retailer That Sells 10-Pound Bags of Senior Dog Food