Which inventory term refers to the minimum quantity of stock to reorder to prevent stockouts?

• A. Economic order quantity
• B. Lead time
• C. Safety stock
• D. Reorder point

Answer: (C)

Safety stock is the buffer inventory kept beyond what you expect to sell or use in a given period. This extra quantity protects against variability in demand and delays in supply, so you don’t run out of stock even when things don’t go exactly as planned. In other words, safety stock serves as a minimum cushion that prevents stockouts by absorbing unexpected spikes in demand or longer-than-expected lead times. It’s the proactive safeguard that keeps availability, whereas the reorder point is the signal level that triggers a new order (typically equal to expected demand during lead time plus safety stock). Economic order quantity focuses on the most cost-efficient order size, and lead time is the time between ordering and receiving goods.