A Company May Wish to Add a Safety Stock If

question 8

Multiple Choice

A company may wish to add a safety stock if it faces uncertain demand.The inventory analyst should modify the following in light of the safety stock:

• A)recompute the average inventory by adding the safety stock amount to the present average inventory balance
• B)recompute the reorder point by adding the safety stock to the present reorder point
• C)recompute EOQ by adding the safety stock to period demand to arrive at a new usage rate
• D)both a and b
• E)both b and c

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Definitions:

Other Expenses

Costs that are not directly associated with the production of goods or services, such as administrative and selling expenses.

Planning Budget

A budget created for a particular level of activity, it helps in setting goals and objectives for future financial plans.

Containers Refurbished

The process of cleaning, repairing, and restoring containers to a like-new condition for reuse or resale.

Employee Salaries And Wages

Compensation paid to employees for their labor or services, typically expressed as a periodic payment such as hourly, weekly, or monthly.