MANAGEMENT

Detailed explanation-1: -Target inventory is the quantity of a company item at a given moment. Safety stock is a sub-component of the target inventory level. At the same time, we consider safety stock by calculating the target inventory level.

Detailed explanation-2: -There are four main types of inventory: raw materials/components, WIP, finished goods and MRO.

Detailed explanation-3: -The primary reason for holding stock is to generate revenue through the sale of goods and services. To avoid the risk of a stock-out occurring and the subsequent potential towards lost sales, a company will typically hold some level of stock on hand. This is generally referred to as buffer or safety stock.