Safety stock is calculated as the difference between the maximum daily usage and the:
A) average daily rate of usage
B) average daily rate of usage multiplied by the number of days lead time
C) number of days of lead time
D) average number of days of lead time multiplied by the rate of usage

Question

Quizplus · Accepted Answer

Safety stock is the inventory buffer kept by a company to reduce the risk of stockouts caused by variations in demand and lead time. It is calculated as the difference between the maximum daily usage and the average daily usage multiplied by the number of days lead time. Option B best represents this formula.

Safety Stock Is Calculated as the Difference Between the Maximum