Safety stock

[Eugine]

Safety stock is stock that is kept on hand as a buffer in the event of an expected problem with supply or an increase in demand. Companies use supplies of safety stock to reduce the risk that they will sell out and not have stock available for customers who want to buy it. Calculating the amount of stock to keep in the form of reserve inventory is a delicate balance because companies do not want to keep unused stock on hand, but they also do not want to run short.