In inventory management, the primary purpose of maintaining safety stock is to achieve which of the following objectives?

Introduction / Context:
This question belongs to operations and inventory management. Safety stock is an additional quantity of inventory held over and above the expected demand during lead time. Its purpose is to buffer against uncertainty and avoid costly stockouts that can lead to lost sales, production stoppages or dissatisfied customers. Understanding the precise objective of safety stock helps managers set appropriate levels and avoid unrealistic expectations such as completely eliminating all risk.

Given Data / Assumptions:
- The focus is on safety stock and its purpose in an inventory system.
- The options mention eliminating stockouts, controlling stockouts due to demand variability, replacing defective units and eliminating errors in record keeping.
- We assume that lead time demand and its variability are important in deciding safety stock levels.
- Safety stock is considered as a protective measure, not as a tool for correcting data errors.

Concept / Approach:
Safety stock is designed to protect against uncertainty in demand and, in some cases, supply during lead time. Because demand is not perfectly predictable, actual usage during lead time may be higher than the forecast. Holding extra units as safety stock reduces the probability that inventory will drop to zero before the next replenishment arrives. However, safety stock does not completely eliminate the possibility of stockouts, as that would require infinite inventory or extremely high levels that are not economical. It also does not primarily address defective units or errors in inventory records, which must be handled through quality control and better information systems.

Step-by-Step Solution:
Step 1: Recall that safety stock is additional inventory intended to absorb unexpected demand during lead time. Step 2: Look for the option that mentions controlling the likelihood of stockouts due to variability of demand rather than eliminating risk entirely. Step 3: Recognise that completely eliminating stockouts (option A) is unrealistic and not the primary objective, because it would lead to excessive inventory costs. Step 4: Note that replacing failed units (option C) and eliminating record errors (option D) are separate issues, not the core focus of safety stock. Step 5: Select option B, which correctly describes safety stock as a control mechanism for the probability of stockout due to demand variability during lead time.

Verification / Alternative check:
To verify, imagine a retailer that typically sells 100 units of a product during the supplier lead time but occasionally sells 120 due to demand spikes. If the retailer orders exactly 100 units each time with no safety stock, any such spike will cause a stockout. By holding extra safety stock, perhaps 20 units, the retailer can cover these occasional surges and drastically reduce, but not absolutely eliminate, the chance of running out. This example shows that safety stock is about managing risk caused by variability, not about correcting defective items or data mistakes.

Why Other Options Are Wrong:
Option A suggests eliminating the possibility of a stockout, which is not practical without unreasonably large inventories and is not how safety stock is defined in standard models.
Option C focuses on replacing defective units, which is more related to quality assurance and warranty management than to safety stock policy.
Option D treats safety stock as a cure for erroneous inventory tallies, whereas record errors must be addressed through better systems and controls, not by simply holding extra stock.

Common Pitfalls:
A common misunderstanding is believing that safety stock guarantees zero stockouts, leading to overly optimistic expectations and improperly designed inventory policies. Another pitfall is confusing safety stock with buffer inventory for scrap or defects, or treating it as a way to hide poor data discipline. To avoid these mistakes, remember that safety stock is a calculated buffer against uncertain demand and lead time, aiming to bring the probability of stockout down to an acceptable level, not to zero.

Final Answer:
The primary purpose of safety stock is to control and reduce the likelihood of a stockout due to variability of demand during lead time.