Asked by Sierra Schick on May 07, 2024
Verified
The issue of product availability and the level of safety inventory is particularly significant in industries where
A) product life cycles are short and demand is stable.
B) product life cycles are short and demand is very volatile.
C) product life cycles are long and demand is stable.
D) product life cycles are long and demand is very volatile.
Safety Inventory
Additional stock that is kept in inventory to protect against uncertainties in demand or supply.
- Identify the significance of product availability and safety inventory in volatile demand scenarios.
Verified Answer
RK
Rajeswary KumarMay 14, 2024
Final Answer :
B
Explanation :
In industries where product life cycles are short and demand is very volatile, it is important to have a high level of safety inventory to ensure product availability. This is because demand can quickly shift and it may be difficult to replenish inventory in a timely manner. In contrast, industries with long product life cycles and stable demand may not require as much safety inventory since demand can be predicted more accurately and lead times are longer.
Learning Objectives
- Identify the significance of product availability and safety inventory in volatile demand scenarios.