Taking inventory, what term describes the extra stock kept to avoid stockouts?

Taking inventory, what term describes the extra stock kept to avoid stockouts?

• A. Safety stock
• B. Parstock
• C. Reorder point
• D. Just-in-time

Answer: (C)

The buffer inventory kept to guard against unexpected demand or supply delays is safety stock. It serves as a cushion so you don’t run out during variability in usage or longer-than-expected lead times. Reorder point, on the other hand, is the level at which you place a new order to replenish stock; it’s a trigger based on lead time and expected consumption, and it may incorporate some buffer indirectly, but it is not the extra stock itself. Just-in-time aims to minimize inventory, while par stock sets planned minimums, but the specific term for the extra stock kept to prevent stockouts is safety stock.

The buffer inventory kept to guard against unexpected demand or supply delays is safety stock. It serves as a cushion so you don’t run out during variability in usage or longer-than-expected lead times. Reorder point, on the other hand, is the level at which you place a new order to replenish stock; it’s a trigger based on lead time and expected consumption, and it may incorporate some buffer indirectly, but it is not the extra stock itself. Just-in-time aims to minimize inventory, while par stock sets planned minimums, but the specific term for the extra stock kept to prevent stockouts is safety stock.