Which statement best describes buffer stock or safety stock?

Which statement best describes buffer stock or safety stock?

• A. Extra inventory kept to cover fluctuations in supply or demand.
• B. Inventory held for expected future demand or price increases.
• C. Inventory used to support promotional campaigns.
• D. Inventory kept for seasonal clearance.

Answer: (A)

Buffer stock, or safety stock, is extra inventory kept to cover fluctuations in supply or demand. This cushion helps prevent stockouts when supplier lead times are longer than expected or when demand varies unexpectedly, keeping service levels high. The statement that best describes this is that extra inventory is held to cover fluctuations in supply or demand. Inventory for expected future demand or price increases is anticipatory or speculative stock, not safety stock. Inventory for promotional campaigns is promotional stock, and inventory kept for seasonal clearance is seasonal/clearance stock.

Buffer stock, or safety stock, is extra inventory kept to cover fluctuations in supply or demand. This cushion helps prevent stockouts when supplier lead times are longer than expected or when demand varies unexpectedly, keeping service levels high. The statement that best describes this is that extra inventory is held to cover fluctuations in supply or demand. Inventory for expected future demand or price increases is anticipatory or speculative stock, not safety stock. Inventory for promotional campaigns is promotional stock, and inventory kept for seasonal clearance is seasonal/clearance stock.