The X-Factor, sometimes called the uncertainty factor, is a variable used in inventory forecasting and safety stock calculations to account for unpredictable changes in demand or supply conditions. It represents the unknown or unexpected fluctuations beyond historical trends.Incorporating the X-Factor into inventory models helps companies build buffers against volatility, reducing stockouts and enhancing service levels. However, excessive conservatism can lead to high carrying costs, so balancing the X-Factor is key to effective inventory optimization.
