Safety Stock Exists for Which of the Following Reasons

question 20

Multiple Choice

Safety stock exists for which of the following reasons?

• A)To allow less expensive purchases by buying more.
• B)To allow for transportation time.
• C)To provide protection against the uncertainties of supply and demand.
• D)None of these selections.

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Definitions:

Periodic Inventory System

An inventory management system where the inventory count is conducted at specific intervals to determine the cost of goods sold.

Discount Period

The time frame in which a discount is offered for prompt payment of an invoice, encouraging early payment by customers.

Shrinkage

The loss of inventory that can occur from theft, damage, or errors in the counting or recording of stock.