Certified Supply Chain Professional (CSCP) Practice Exam

Which type of inventory is specifically held to absorb fluctuations in production?

1. Safety stock

2. Cycle stock

3. Anticipation inventory

4. Buffer inventory

The correct answer is: Buffer inventory

The type of inventory specifically held to absorb fluctuations in production is buffer inventory. Buffer inventory serves as a reserve that cushions against variations in supply chain processes, such as unexpected delays in production or procurement. By maintaining this extra inventory, companies can manage disruptions effectively, ensuring that production runs smoothly and that customer demands are met even when there are interruptions or variations in the normal workflow. Safety stock, although it can also serve a similar purpose, specifically addresses uncertainties in demand rather than fluctuations in production. Cycle stock refers to the inventory that is regularly replenished through the normal purchasing and production cycles, and anticipation inventory is held in expectation of customer demand surges, such as seasonal fluctuations. However, buffer inventory directly targets the unpredictability in production processes, making it an essential component for maintaining operational stability.