Explanation:

Buffer stock is a level of stock that is maintained to avoid stockouts or shortages. It is also known as safety stock, and it acts as a cushion between the actual stock level and the minimum stock level. The correct answer is option 'C', which states that buffer stock is the minimum stock level below which actual stock should not fall. Here's why:

• Definition of buffer stock: Buffer stock is the level of inventory that a company or organization maintains to ensure that it has enough stock to meet the demand, even in the face of unexpected or sudden demand.

• Purpose of buffer stock: The purpose of buffer stock is to ensure that there is always enough inventory available to meet customer demand, even when there are unexpected spikes in demand, supplier disruptions, or delays in receiving new inventory.

• Buffer stock level: The buffer stock level is usually set at a level that is above the minimum stock level but below the maximum stock level. It is the level of inventory that the company maintains in addition to the minimum stock level.

• Minimum stock level: The minimum stock level is the level of inventory that a company must maintain to ensure that it does not run out of stock. This level of inventory is determined based on the lead time required to receive new inventory and the rate of demand for the product.

• Importance of buffer stock: Buffer stock is important for companies because it helps them to meet customer demand even in the face of unexpected or sudden demand. It also helps to reduce the risk of stockouts, which can result in lost sales, unhappy customers, and damage to the company's reputation.

In conclusion, buffer stock is the minimum stock level below which actual stock should not fall. It is important for companies to maintain buffer stock to ensure that they can meet customer demand even in the face of unexpected or sudden demand.

A