Buffer stock is the level of stock
a) half of the actual stock
b) at which the ordering process should start
c) minimum stock level below which actual stock should not fall
d) maximum stock in inventory
The level of extra stock maintained to mitigate the risk of stockouts caused by uncertainties in demand & supply is referred to as Buffer Stock. It is a backup stock, which retains some kind of buffer to protect in case of an uncertain future.
Buffer stock is kept as an extra backup to prepare for any uncertain business situations.
Correct Answer – c) Minimum stock level below which actual stock should not fall