Safety stock and operational volume flexibility

This chapter provides an overview and fundamental aspects of safety stock and operational volume flexibility in coping with environmental uncertainties. Theoretical foundations of these two concepts are discussed by way of various inventory models and examples of facets of manufacturing flexibility. Furthermore, practical examples of how safety stock and operational volume flexibility enable firms to adeptly produce efficiently in uncertain environments will be described. Theoretical forms of industrial uncertainty in operating environments are discussed, and an empirical study of firm financial performance across a spectrum of levels of environmental uncertainty will be summarized. Lastly, emerging challenges and support for production managers operating in uncertain environments as well as future research opportunities are outlined.