Which of the following determines the safety stock level in inventory management?

The determination of safety stock levels in inventory management primarily relies on historical data of average consumption. This approach allows businesses to understand typical usage patterns over time, which aids in flagging potential shortages. By analyzing historical consumption data, companies can identify trends and fluctuations in demand, and thus calculate the necessary safety stock to mitigate the risk of stockouts during unexpected spikes in demand or supply chain disruptions.

Supplier delivery reliability influences how often and predictably products are replenished, which plays a role in how much safety stock might be needed, but it does not directly determine the safety stock level itself. Similarly, market demand forecasts focus on projecting future demand rather than assessing current inventory safety levels. Production lead times reflect how long it takes to produce items and help manage replenishment but aren't inherently tied to determining how much safety stock to maintain.

Understanding consumption trends is essential because it forms the basis for justifying safety stock levels, ensuring that businesses are adequately prepared for variability in demand or supply, thereby optimizing inventory management and performance.