The least stock a firm wants to hold?

• A. Maximum Stock Level
• B. Minimum (Buffer) Stock Level
• C. Re-Order Quantity
• D. Lead Time

Answer: (B)

Minimum (buffer) stock level is the lowest quantity of inventory a business should keep on hand as a safety buffer. It acts as a cushion against uncertainties in demand or delays in supply, ensuring the firm can continue fulfilling orders even when things don’t go exactly to plan. When stock falls to this level, replenishment is triggered to prevent a stockout. This is why it’s described as the least stock a firm wants to hold—the level kept specifically to avoid running out.

In contrast, maximum stock level is the upper limit to control carrying costs, reorder quantity is the amount ordered each time you place an order, and lead time is the waiting period between placing an order and receiving it.