Which of the Following Statements Is TRUE

question 100

Multiple Choice

Which of the following statements is TRUE?

• A) The level of safety stock maintained decreases when the desired cycle service level increases.
• B) The level of safety stock maintained decreases when the standard deviation of demand during lead time increases.
• C) In a fixed-period inventory system, the value of Q is kept the same from one cycle to another.
• D) In a fixed-order-quantity system, the reorder point is the average demand during the lead time, plus the additional safety stock when demand is uncertain.

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Definitions:

Fixed Overhead

This refers to the consistent, non-variable costs incurred by a business, regardless of its level of production or sales volumes.

Variable Overhead

Costs that vary with the level of production output, such as utilities for machines and indirect materials.

Direct Labor Hours

The total hours worked by employees directly involved in the production of goods or services.

Variable

An element, feature, or factor that is liable to vary or change.