Materials
Safety Stock
Extra inventory held to prevent stockouts due to demand variability or supply delays.
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Updated 2025-10-01
Definition
Safety stock acts as a buffer, ensuring that orders can still be fulfilled during unexpected demand spikes or supply chain disruptions.
Overview
Overview
Calculating safety stock involves analyzing lead times, demand variability, and desired service levels to maintain reliable inventory levels.
Benefits
- Prevents stockouts
- Maintains customer satisfaction
- Reduces production delays
Example
A warehouse holds 500 units as safety stock for a high-demand item to ensure continuous availability during supplier delays.
Tags
#Safety Stock#Inventory Management#Materials#Warehouse#Buffer
Related Terms
Reorder Point Formula (ROP Formula)
Inventory Turnover
Perpetual Inventory System
