Definition and example
Safety stock is an additional reserve of materials or goods for deviations in demand, lead time or quality. It is not an insurance contract and not a cash emergency fund. If normal demand during the lead time is 100 units and an enterprise holds another 30 as a buffer, those 30 serve a protective function in the stated model. The size requires assessing shortage consequences, variability, holding cost and obsolescence. A larger reserve reduces some interruptions but ties up money and does not eliminate every supply risk.
How to avoid a mistake
Under a simple replenishment rule, add the reserve to expected usage during lead time rather than subtracting it. But continually increasing the buffer can conceal an unreliable supplier or an inaccurate forecast. First identify the deviation being protected against and the service level considered acceptable.
For more on the link between cost and markdown, see the [educational analysis](/guides/inventory-cost-nrv/).
Sources and limits of the check
Basis: gl-mit-inventory. The Russian term describes a management function, not a separate mandatory IFRS line item. The example is editorial; the rules of a particular contract and accounting system must be checked separately.