Texas A&M University (TAMU) IDIS 343 Distribution Logistics Exam 1 Practice

The main idea is distinguishing how cycle stock and safety stock serve different roles in inventory management. Cycle stock is the portion you stock to meet normal, forecasted demand during the replenishment cycle. It’s the quantity ordered to cover what you expect to sell while you wait for the supply to arrive, and it’s consumed as customers buy. Safety stock, by contrast, is an extra buffer kept to guard against uncertainties—demand that turns out higher than forecast or longer-than-expected lead times. It isn’t used for regular demand; it only comes into play when variability hits. The size of safety stock depends on how much variability there is in demand and in supply lead time and on the desired service level, while cycle stock is driven by the planned order quantities and the regular replenishment cycle. This arrangement keeps service stable without overstocking: cycle stock handles the expected flow, safety stock protects against disruption.