Which One of the Following Statements Is Best

question 99

Multiple Choice

Which one of the following statements is best?

• A) When no safety stock is maintained, stockouts will occur during approximately 50 percent of the cycles.
• B) The level of safety stock maintained decreases when the desired cycle- service level increases.
• C) The level of safety stock maintained is greater if mean absolute deviation (MAD) is used rather than standard deviation in estimating forecast errors.
• D) The level of safety stock maintained decreases when the standard deviation of demand during lead time increases.

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Definitions:

Economic Profit

The financial measurement between a company's aggregate earnings and its total costs, covering both explicit and hidden charges.

Output Level

The quantity of goods or services produced by a firm or economy in a certain period.

Nondiscriminating

A principle or practice that ensures equal treatment and opportunities for all, without biases or prejudices based on irrelevant characteristics.

Pure Monopolist

A single seller in a market with no close substitutes for its product, dictating the market terms and prices.