What is 'cycle stock'?

Cycle stock refers to the portion of inventory that a company maintains to fulfill regular customer demand over a specific period. This type of inventory is replenished regularly to match the anticipated consumption rates of products in a business. For example, a retail store would keep a certain level of cycle stock on hand to ensure that they can meet the needs of their customers without experiencing shortages during normal sales periods.

This is important for efficient inventory management and helps companies minimize holding costs while still providing a reliable supply of products to customers. By maintaining an appropriate level of cycle stock, businesses can operate smoothly and effectively respond to customer orders without delay.

In contrast, other inventory types, like safety stock, are held to cushion against unexpected demand spikes, while dead stock refers to items that are unlikely to be sold or are damaged. Thus, the importance of cycle stock lies in its role in supporting regular operational needs and maintaining service levels.