Asked by Michael Ariestan on May 20, 2024
Verified
The required safety inventory
A) increases with an increase in the lead time and the standard deviation of periodic demand.
B) decreases with an increase in the lead time and the standard deviation of periodic demand.
C) remains stable with an increase in the lead time and the standard deviation of periodic demand.
D) increases with a decrease in the lead time and the standard deviation of periodic demand.
Safety Inventory
A stock buffer maintained to mitigate risk of stockouts due to demand variability and supply chain uncertainties.
Lead Time
The duration between the initiation and completion of a process, such as the time from placing an order to its delivery.
Standard Deviation
A measure of the dispersion or variability within a set of data points, indicating how much variation exists from the average.
- Gain insight into the link between inventory reserved for safety and achieving desired levels of product availability.
Verified Answer
Learning Objectives
- Gain insight into the link between inventory reserved for safety and achieving desired levels of product availability.
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