Safety stock

Safety stock

1) The stock held to protect against the differences between forecast and actual consumption, and between expected and actual delivery times of procurement orders, to protect against stockouts during the replenishment cycle.

In calculating safety stock, account is taken of such factors as service level, expected fluctuations of demand and likely variations in lead time. (Source: ILT Supply-Chain Inventory Management SIG)

Source: David Lowe. The Dictionary of Transport and Logistics. Kogan Page, 2002. – P.216 (288 p.)