New Enroll in our GIC Finance Online Course Here!

    Register

    Question

    In an inventory control model the ‘Buffer stock’ is

    the level of stock
    A Equal to hhalf of the actual stock Correct Answer Incorrect Answer
    B At which the ordering process should start Correct Answer Incorrect Answer
    C Minimum stock level below which actual stock should not fall Correct Answer Incorrect Answer
    D Maximum stock in inventory Correct Answer Incorrect Answer
    E Quarter of the annual carrying cost Correct Answer Incorrect Answer

    Solution

    Buffer stock’ or ‘strategic stock’ or ‘safety stock’ or ‘buffer inventory ’ is defined as a supply of inputs held as a reserve in case there are future demand and supply fluctuations. It is the excess inventory or safety stock, which retains some kind of buffer to protect in case of uncertain future.

    Practice Next