What Is a Good Safety Stock?

Anyone in the business of selling things comes to this crossroads at some point: How much (if anything at all) should you set aside for a rainy day? This isn’t only a question of money; it also applies to the things themselves–the supply of goods, materials, and finished products that a business provides its customers. 

So, is it a good idea to factor in some amount of surplus inventory, a safety stock, if you will, in case of emergencies? Ideally, of course, supply and demand are always thrumming along in perfect unison, eliminating the need for such questions. But it doesn’t take a master’s degree in economics or business administration to know that this isn’t how the world works, not all the time at least. Whether it’s due to an unforeseen crisis, a hiccup in international trade, or plain old bad planning, sometimes there just isn’t enough of one

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