Which term describes safety stock?

• A. Lead time
• B. Open-to-buy
• C. Safety stock
• D. Economic order quantity

Answer: (C)

Holding extra inventory to guard against variability in demand or supply is the idea behind safety stock. It serves as a buffer so you don’t run out if demand spikes or deliveries are late, helping maintain service levels even when things don’t go exactly to plan. The other terms relate to different aspects of inventory management but aren’t the buffer itself: lead time is the time you wait for a replenishment, open-to-buy is a budgeting tool for planned purchases, and economic order quantity is the calculated optimal order size to minimize costs. Safety stock is the extra inventory kept specifically to cushion against uncertainty.