The minimum level of inventory that a firm wants to keep on hand at all times is referred to as:
A)the base level.
B)safety stock.
C)the opportunity cost.
D)the reorder point.
E)keiretsu.

Question

Quizplus · Accepted Answer

Safety stock is the minimum level of inventory that a firm wants to keep on hand at all times to ensure that there is no stockout. It acts as a buffer against unexpected fluctuations in demand or supply chain disruptions, ensuring that the firm can continue to meet customer demand without disruptions. It is calculated based on historical demand variability and lead times, and typically represents a pre-determined number of weeks or days of sales.

The Minimum Level of Inventory That a Firm Wants to Keep