Safety stock

Okay, so let's say you love eating cupcakes. But, you don't always have time to bake them every day. So, what do you do? Well, you make a lot of cupcakes at once and keep them in your cupboard so you can eat them whenever you want without having to wait for the oven to heat up and the cupcakes to cook.

Now, let's imagine you are a store owner and instead of cupcakes, you sell toys. You order lots of toys from different companies so that you can sell them in your store. But, just like baking cupcakes, it takes time for the toys to be delivered to your store. You also want to make sure that you never run out of toys because then your customers would be sad and may go to a different store.

So, what do you do? You have something called a "safety stock". This means you order extra toys to keep in your store just in case the delivery of toys from a company is delayed or there is an unexpected demand for them. The safety stock acts like a backup plan. It makes sure that your store always has enough toys for your customers and you don't lose any business.

Does that make sense, little one?