Which statement best describes cycle stock?

• A. Inventory held for strategic products only.
• B. Inventory built to meet safety stock.
• C. Inventory built to meet expected demand during lead time.
• D. Inventory used for irregular promotions.

Answer: (C)

Cycle stock is the portion of inventory that is built up to cover the normal, predictable demand that will occur during the replenishment lead time. When you place orders in fixed quantities, the amount you bring in with each order is used up as you sell items while waiting for the next shipment. That on-hand quantity represents cycle stock, the part of inventory that turns over in the regular cycle.

So the statement that describes cycle stock best is the one that says it is inventory built to meet expected demand during lead time. It’s not about reserving stock for strategic products, nor is it safety stock (the buffer kept for uncertainty) or stock set aside for irregular promotions. An example: if demand averages 50 units per day and lead time is 5 days, you’d expect about 250 units to cover that period—that’s cycle stock.