Asked by Vaughn Lawrence on Jun 26, 2024
Verified
If a company increases its safety stock,then its average inventory will go up.
Average Inventory
The mean stock level held by a business over a certain period of time, calculated to manage and evaluate inventory efficiently.
Safety Stock
Inventory kept on hand to protect against variability in demand or lead time.
- Comprehend the extent and difficulties involved in managing working capital, encompassing current assets and liabilities.
Verified Answer
SH
Sherry HightowerJul 03, 2024
Final Answer :
True
Explanation :
Safety stock is additional inventory that is kept in reserve to protect against unexpected fluctuations in demand or supply. By increasing safety stock, a company is effectively increasing its overall inventory levels because there will be more inventory on hand at any given time. Therefore, the average inventory level will go up as well.
Learning Objectives
- Comprehend the extent and difficulties involved in managing working capital, encompassing current assets and liabilities.