Buffer Stock
Also known as: buffer stock, safety stock, reserve stock, contingency stock
Inventory held in reserve to protect against supply disruptions, delivery delays, unexpected increases in demand, or other uncertainties in the supply chain.
Buffer stock is maintained to reduce the risk of stockouts and ensure business operations continue when actual demand or supply differs from forecasts. It provides a safety margin against supplier delays, transportation disruptions, production issues, seasonal fluctuations, and unexpected customer demand. Maintaining an appropriate level of buffer stock improves service levels and operational continuity, although excessive buffer stock can increase inventory carrying costs and tie up working capital.
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