Safety stock is the minimum level of inventory needed to protect against running old stock.

INTRODUCTION TO COST ACCOUNTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A	TRUE
B	FALSE

Explanation:

Detailed explanation-1: -The Minimum Stock (Safety Stock) requirement specifies the lowest quantity of a certain product in a warehouse, and is added to the total replenishment recommendation. This value is set independently by location/warehouse. Replenishment recommendations are calculated to cover your Lead Time and Days of Stock.

Detailed explanation-2: -Minimum Stock Level/Safety Stock This is the absolute minimum number of products you need to have in order to fulfill market demand. The calculation for this number depends on the lead time.

Detailed explanation-3: -D. the higher the profit margin per unit, the higher the safety stock necessary. The answer is true regarding safety stock.

Detailed explanation-4: -What are minimum inventory levels? Your minimum inventory levels are the lowest amount of a product that you can have in stock and still be able to meet customer demand. This number is important because it helps you avoid running out of a product, which could lead to lost sales and unhappy customers.

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