A Decrease in an Item's Lead Time Will Increase the Amount

question 58

True/False

A decrease in an item's lead time will increase the amount of safety stock required to maintain a constant service level.

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Definitions:

Cost of Goods Sold

The primary costs involved in the production of goods a company deals in, including the expenses for materials and labor.

Variances

Differences between planned, budgeted, or standard costs and actual costs, used in performance measurement and control.

Standard Cost

A predetermined cost of manufacturing, delivering, or producing goods under normal conditions.

Standard Cost System

An accounting system that estimates the cost of products in advance, using standard rates for materials and labor.