Which type of inventory directly impacts a business's ability to meet daily demand?

Cycle stock is the type of inventory that directly influences a business's ability to meet daily demand. It represents the portion of inventory that is actively used and replenished on a regular basis to satisfy customer orders and keep operations running smoothly. Companies maintain cycle stock to ensure they have enough products on hand to meet fluctuations in demand without overstocking. This enables them to respond promptly to customer needs and minimizes the risk of stockouts, which can impact customer satisfaction and sales.

In contrast, inactive stock refers to inventory that is no longer in demand and is not being sold or used actively, which does not contribute to meeting current demand. Obsolete stock consists of items that are outdated and unsellable, thus having no impact on daily operations. Sensitivity stock, while a less common term, typically refers to stock that adjusts based on varying customer preferences or market trends, but it does not directly relate to meeting everyday demand in the same way that cycle stock does. Therefore, cycle stock is essential for operational efficiency and ensuring that demand is met on a day-to-day basis.