ECONOMICS

Detailed explanation-1: -Safety stock is an extra quantity of a product which is stored in the warehouse to prevent an out-of-stock situation. It serves as insurance against fluctuations in demand.

Detailed explanation-2: -Also known as “buffer stock” or “backup inventory”, safety stock is surplus inventory retailers purchase in addition to their typical cycle stock to mitigate the risk of facing a potential stockout situation.

Detailed explanation-3: -Safety stock is held when uncertainty exists in demand, supply, or manufacturing yield, and serves as an insurance against stockouts. Safety stock is an additional quantity of an item held in the inventory to reduce the risk that the item will be out of stock.

Detailed explanation-4: -Safety stock is extra inventory retailers keep on hand as a buffer. Retailers may decide to have safety stock for a number of reasons, including inventory shrinkage, selling inventory faster than expected, shipping delays, and general supply chain interruptions.