The required safety inventory: increases with an increase in the lead time and t
ID: 468621 • Letter: T
Question
The required safety inventory:
increases with an increase in the lead time and the standard deviation of periodic demand.
decreases with an increase in the lead time and the standard deviation of periodic demand
remains stable with an increase in the lead time and the standard deviation of periodic demand.
increases with a decrease in the lead time and the standard deviation of periodic demand.
increases with an increase in the lead time and the standard deviation of periodic demand.
decreases with an increase in the lead time and the standard deviation of periodic demand
remains stable with an increase in the lead time and the standard deviation of periodic demand.
increases with a decrease in the lead time and the standard deviation of periodic demand.
Explanation / Answer
increases with an increase in the lead time and the standard deviation of periodic demand. Correct option
As the lead time is higher, it will result in higher safety stock as you will need more goods as safety stock due t increased time of arrival of goods.
As the standard deviation increase, it will mean demand fluctuation increases hence a higher safety stock is required.
increases with an increase in the lead time and the standard deviation of periodic demand. Correct option