What is the primary function of safety stock in inventory management?

Safety stock plays a crucial role in inventory management by serving as a buffer against fluctuations in demand. It is essentially a reserve of inventory that is maintained to ensure that a company can meet customer demand even when there are unexpected spikes or variations. This variability can arise from many factors, such as seasonal trends, market changes, or supply chain disruptions.

By maintaining safety stock, businesses can minimize the risk of stockouts, which can lead to lost sales and dissatisfied customers. This added layer of inventory helps to balance the uncertainties in demand with the actual supply available, ensuring a smooth operation in the manufacturing and sales processes. Consequently, safety stock is important for maintaining service levels and optimizing inventory turnover, contributing to overall operational efficiency.

The other options provided do not capture the primary purpose of safety stock. While production costs, manufacturing processes, and lead times are important aspects of inventory management, they do not directly relate to the primary function of safety stock, which is specifically designed to address demand variability.