Discuss why firms carry safety stock

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Reference no: EM133237794

Question: For many industries, it is important to always have a given amount of stock available as "safety stock". In your post:

Define safety stock.
Discuss why firms carry safety stock given that it increases inventory cost.
Discuss the choice of "no stockout" probabilities (90%, 95%, 99%) in determining safety stock.
1. What probability would a hospital choose in their calculations?
2. What choice would a shoe store?
3. What choice would you pick for your own line of work?

Reference no: EM133237794

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