Safety Stock

Safety stock is extra inventory kept on hand to protect against uncertainty in supply or demand. It serves as a buffer to ensure that a business can continue to meet customer needs if there are delays in delivery or unexpected increases in sales. By maintaining safety stock, companies reduce the risk of stockouts, which can lead to missed sales or unhappy customers. It's a strategic reserve that helps smooth out the supply chain fluctuations, balancing costs with service levels to ensure reliability and customer satisfaction.