Which statement best describes safety stock?

Which statement best describes safety stock?

• A. Inventory in transit
• B. Buffer stock above anticipated demand
• C. Inventory that is the regular cycle stock
• D. Inventory used to meet future events

Answer: (B)

Safety stock is extra inventory kept as a cushion to cover variability in demand and in supply lead times. It sits above the level of anticipated demand so that you can maintain service levels even when actual demand is higher than forecast or when replenishment is delayed. That makes it the best description of safety stock because its purpose is precisely to guard against uncertainty, not for normal cycle flow or for known future events.

By comparison, inventory in transit refers to items already on the move between locations, not a deliberate buffer for uncertainty. Regular cycle stock is the normal replenishment inventory used to meet predicted demand in each period. Inventory used to meet future events is stock set aside for specific, known occasions, which is separate from the general buffer used to absorb forecast errors and lead-time variability.