safety stock

safety stock definition - business

safety stock

The minimum amount of inventory of a particular item that is maintained to insure against being unable to satisfy customer demand. For example, a produce company maintains a safety stock equal to 10% of monthly sales, in case of unexpected demand. Reducing safety stock results in lower inventory costs, but makes it more likely a firm will lose sales.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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