MANAGEMENT

Detailed explanation-1: -Safety stock is inventory that is kept on hand in order to protect against unexpected spikes in demand or unexpected delays in supply. It is also used to maintain a certain level of service for customers.

Detailed explanation-2: -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-3: -Safety stock compensates for forecast inaccuracy and demand fluctuations, covering the demand until the supply chain can replenish the gap. In other words, safety stock is a demand buffer.

Detailed explanation-4: -While cycle stock inventory is held to meet most of the projected sales, safety stock is held to cover demand fluctuations and it involves many variables, including unexpected changes in supply or delivery lead times.

Detailed explanation-5: -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.