Which term refers to inventory that resides in transit within the distribution network and the transportation system?

• A. Buffer stock
• B. Safety stock
• C. Pipeline stock
• D. Transit stock

Answer: (C)

The main concept is inventory that is in transit within the distribution network—inventory moving through the transportation system from one node to another. This is called pipeline stock. It represents goods that have been ordered and are on the way between facilities, warehouses, suppliers, and customers, so they aren’t yet available at a usable location, but they are still counted as part of stock because they are on the move.

Pipeline stock grows with the length of transit and the rate at which you consume while items are in shipment. A quick way to estimate it is the demand that occurs during lead time (or transit time). For example, if daily demand is 25 units and transit lead time is 8 days, you’d expect about 200 units to be in transit. This stock ties up capital and affects carrying costs, even though it isn’t sitting on a shelf.

It’s different from buffer stock and safety stock, which are extra reserves held at a location to guard against variability. Pipeline stock is specifically the portion of inventory that is en route, not sitting at a facility. Transit stock is sometimes used informally to describe in-transit inventory, but pipeline stock is the standard term for this concept in inventory management.