Four Reasons for carrying safety stock
To account for unexpected demand: Unexpected increases in demand for a product can lead to stockouts if safety stock is not maintained.
To account for lead time variability: Lead time is the time it takes for a supplier to deliver an order. Safety stock is used to ensure that there is enough inventory on hand to cover the longest lead time.
To account for production variability: Safety stock is used to ensure that there is enough inventory on hand to cover any unexpected disruptions in production.
To account for supplier variability: Safety stock is used to ensure that there is enough inventory on hand to cover any disruptions in supply caused by a supplier’s inability to deliver an order on time.
