safety stock


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Safety Stock

Inventory a company keeps in order to avoid running out. For example, a grocery store may buy more apples than it expects to sell in case there is a sudden uptick in demand or if the next delivery is delayed. Safety stock is considered a drain on a company's finances because it very likely will not sell. However, it may be necessary for the smooth function of a business. See also: Supply chain management.

safety stock

see STOCK CONTROL.
References in periodicals archive ?
In the context of wholesale policy, the desire is for a model that can prescribe recommended safety stock recommendations across large numbers of items.
Pre-positioning essential material and safety stocks: Hurricanes can now be forecast in advance with much greater accuracy, giving companies more time to plan mitigation efforts.
The company also delivered regular inventory forecasting at the product store day level, improving accuracy from 60% error to less than 30% error and enabling the retailer to maintain less safety stock and reduce capital tied up in inventory.
As an added value to our customers, we provide complete supply chain management, maintaining inventory, arranging future production, decoration, and providing just-in-time delivery based on a 6 to 12 month safety stock agreement.
Figure 1 illustrates the relation of the demand distribution during order lead time, service level, and safety stock for a normal distribution of demand.
Nowicki and Shailesh Kulkarni, three researchers from the University of North Texas, introduce the science of theoretical minimums--a new approach to looking at the data in supply chains to reduce safety stock and lead times while optimizing inventory.
These tools use formulations based on statistical models and seasonality among other methods and output a model that smooths out the peaks and valleys in order to reduce excess inventory on hand while still maintaining good safety stock and customer service.
The sustainment enterprise must increase safety stock quantities at both the unit and wholesale levels to ensure uninterrupted support of combat operations.
Bard has revised its previous order of safety stock from the company resulting in a negative impact on revenues by SEK8m.
Generally, managers of material requirements planning (MRP) systems keep safety stock to achieve satisfactory customer service in spite of uncertain demand.
A good simulation tool should also measure the effect of changes in supplier lead time, lot size, and safety stock.
It includes 40 pages of reference appendices, including cycle stock and safety stock calculations, total productive maintenance guidelines, the SMED changeover improvement process, bottleneck management, and group technology and cellular flow.