Strategic stock
In one sentenceA large quantity of a vital item the business keeps for a long period in case of supply disruption, rising prices or difficulty importing.
Simply put
It differs from safety stock: safety stock covers a short, usual delay, while strategic stock covers a longer crisis, such as a sole supplier stopping or a shipping crisis.
It has a price: tied-up money and storage costs, so keep it only for items your business cannot run without.
Worked example
A factory imports a raw material from a single supplier, uses 4,000 kg of it a month at 25 SAR per kg, and decided to keep stock enough for 3 months.
Strategic quantity4,000 × 3 = 12,000 kg
Price per kg25 SAR
Money tied up in strategic stock12,000 × 25 = 300,000 SAR
Don't confuse it with
Safety stockSafety stock is for days of usual delay, while strategic stock is for months of crisis.