Safety Stock::
Safety stock refers to the extra inventory (stock) held by a company as a buffer against the unexpected increase in demand or delays in supply.
It is an additional amount of stock that a company keeps beyond its normal inventory(stock) levels to ensure that it can meet customer demand even in case of unforeseen circumstances.
The Safety stock acts as a safety net and protects the company from stockouts, lost sales, and dissatisfied customers.
Reorder level::
Reorder level is the inventory level at which a new order needs to be placed to avoid stockouts. We also consider Lead time at Reorder level.
What is the lead time?
Lead time refers to the time it takes for a company to receive a product after placing an order for it. It includes
Time required for the supplier to process the order
Manufacture the product (if applicable)
Packing it
Ship it
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