Role of Safety Inventory Average inventory =cycle inventory +safety inventory There is a fundamental tradeoff: Raising the level of safety inventory provides higher levels of product availability and customer service Raising the level of safety inventory also raises the level of average inventory and therefore increases holding costs Compaq and Dell in PCs 1990 Nordstrom,Macy's,and Saks during the 2008-2009 recession SEIEE AU406 6+ - SEIEE AU406 6 Role of Safety Inventory  Average inventory =cycle inventory +safety inventory  There is a fundamental tradeoff:  Raising the level of safety inventory provides higher levels of product availability and customer service  Raising the level of safety inventory also raises the level of average inventory and therefore increases holding costs  Compaq and Dell in PCs 1990  Nordstrom, Macy’s, and Saks during the 2008–2009 recession