Safety stock is held because we anticipate future demand.Group startsTrue or False

Final Answer

True.

Explanation

Safety stock is an essential inventory management practice that involves maintaining a buffer of stock to mitigate the risk of stockouts caused by uncertainties in demand and supply. The primary reason for holding safety stock is to anticipate future demand fluctuations, ensuring that a business can continue to meet customer needs without delay.

This practice is particularly important in industries where demand can be erratic or where supply chain disruptions can occur. By holding a safety stock, companies aim to strike a balance between having enough inventory on hand to meet unexpected increases in demand while not overstocking, which may tie up capital.

In summary, safety stock acts as a safeguard against uncertainties in demand forecasting and supply chain variability, making the statement true.