Many small businesses build a(n)________,or cushion,into their inventories in case demand runs ahead of the anticipated usage rate.

Question

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Safety stock is a quantity of inventory that is held back and not sold to ensure that there is enough stock to meet unexpected increases in demand or delays in supply. It acts as a buffer against stockouts and helps small businesses manage inventory risks. Building safety stock into inventory levels can help businesses avoid lost sales, maintain customer satisfaction, and improve their overall supply chain performance. Lead time is the amount of time it takes for a supplier to deliver goods once an order has been placed, EOQ (or Economic Order Quantity) is the optimal quantity of inventory to order, and stockout point is the level of inventory at which a business runs out of stock and risks losing sales. While each of these concepts is related to inventory management, only safety stock addresses the issue of uncertainty and variability in demand and supply.

Many Small Businesses Build A(n)________,or Cushion,into Their Inventories in Case