Ace the 2025 CIPS L4M7 Asset Management Exam – Master Your Whole Life Strategy!

Safety stock is specifically designed to address unexpected increases in demand. This type of inventory acts as a buffer or cushion that helps ensure a company can meet customer demand without running out of stock, especially during unforeseen spikes in sales or demand fluctuations. By maintaining safety stock, businesses are better prepared to handle situations where actual demand surpasses forecasts, thus supporting customer satisfaction and operational continuity.

While trends in sale patterns can inform inventory planning and help predict baseline demand, safety stock is specifically about managing variability and uncertainty. Similarly, while supply chain delays and costs associated with storage are important factors in inventory management, the primary function of safety stock is to provide a safeguard against sudden, unanticipated increases in customer orders, ensuring that the business can still fulfill its obligations.