Which statement best describes minimum viable stock level calculation?

Which statement best describes minimum viable stock level calculation?

• A. Based on average demand
• B. Based on worst-case demand during lead time plus safety stock
• C. Based on random guess
• D. Based on marketing forecasts

Answer: (B)

Minimum viable stock level is about ensuring you can meet demand during the supplier lead time while guarding against variability. The best description is to set it based on the worst-case demand during lead time plus safety stock. This approach leaves enough quantity to cover the highest expected usage in the lead time and adds a cushion for unexpected spikes or delays, which helps prevent stockouts. Relying on average demand ignores variability and can fail when actual demand is higher; forecasts can be optimistic and don't guarantee availability, and a random guess isn’t a method at all.

Minimum viable stock level is about ensuring you can meet demand during the supplier lead time while guarding against variability. The best description is to set it based on the worst-case demand during lead time plus safety stock. This approach leaves enough quantity to cover the highest expected usage in the lead time and adds a cushion for unexpected spikes or delays, which helps prevent stockouts. Relying on average demand ignores variability and can fail when actual demand is higher; forecasts can be optimistic and don't guarantee availability, and a random guess isn’t a method at all.