safety stock

Syllable breakdown

Dictionary meaning

an extra quantity of inventory held as a buffer against unexpected demand spikes, supplier delays, or forecast errors; calculated based on demand variability, lead time variability, and desired service level; trades higher holding costs against reduced risk of stockouts; also called buffer stock or cushion inventory

Examples

• The company increased its safety stock after a single supplier disruption halted production for a week.
• Safety stock calculations balance the cost of holding inventory against the cost of lost sales.

Synonyms: buffer stock, cushion inventory, reserve stock