What is an example scenario of safety stock?

• A. 500 units to cover supplier delays
• B. 100 units to cover seasonality
• C. 50 units buffer
• D. 2000 units to cover growth

Answer: (A)

Safety stock is extra inventory kept to guard against uncertainty in supply and demand, such as late deliveries or sudden spikes in need. Keeping 500 units to cover supplier delays is a clear example because it provides a buffer specifically to absorb delays in getting goods, so service levels aren’t compromised. The other scenarios relate to different inventory ideas: planning for seasonality is about predictable demand changes rather than unexpected disruptions; a small generic buffer lacks a specific risk focus; and stock kept to support growth is intended to meet forecasted increases, not to hedge against supplier unreliability. In practice, safety stock amount depends on lead-time variation and demand uncertainty, and it’s chosen to maintain the desired service level during disruptions.