What parameters are required by the safety stock function?

The safety stock function relies on specific parameters to effectively determine the amount of safety stock needed to mitigate the risk of stockouts. The correct answer includes historical demand data, future demand predictions, and lead time data.

Historical demand provides insights into past consumption patterns and variability, which is essential for accurately forecasting future needs. Future demand captures expectations for how much stock will be needed based on sales strategies, market changes, and seasonality. Lead time is crucial as it informs how long it will take to replenish stock once an order is placed, influencing how much safety stock should be held to cover demand during the lead time period.

By combining historical and future demand with lead time, the safety stock calculation can effectively balance the risk of stockouts against the costs associated with holding excess inventory, ensuring a more resilient supply chain.