What level should the Safety Stock be for Category B stock account?

What level should the Safety Stock be for Category B stock account?

• A. Safety stock should be at a moderate level, 30 to 60 days
• B. Safety stock should be zero
• C. Safety stock should be extremely high
• D. Safety stock should match Category A

Answer: (A)

Safety stock acts as a cushion against unexpected demand spikes and supplier delays. For Category B items, which sit between high-priority A items and lower-priority C items, you want a middle-ground buffer. Keeping safety stock at a moderate level—roughly 30 to 60 days of supply—strikes a balance between maintaining a good service level and controlling carrying costs. This range can be adjusted based on actual variability in demand and lead times, but the principle remains: enough to cover typical fluctuations without tying up excessive capital. Zero stock would increase the risk of stockouts for mid-priority items; making it extremely high would raise holding costs without proportional benefit; aligning safety stock with Category A would overprotect B items since they are less critical and typically have lower risk compared with A items.

Safety stock acts as a cushion against unexpected demand spikes and supplier delays. For Category B items, which sit between high-priority A items and lower-priority C items, you want a middle-ground buffer. Keeping safety stock at a moderate level—roughly 30 to 60 days of supply—strikes a balance between maintaining a good service level and controlling carrying costs. This range can be adjusted based on actual variability in demand and lead times, but the principle remains: enough to cover typical fluctuations without tying up excessive capital. Zero stock would increase the risk of stockouts for mid-priority items; making it extremely high would raise holding costs without proportional benefit; aligning safety stock with Category A would overprotect B items since they are less critical and typically have lower risk compared with A items.