When Both the Demand and Lead Time of a Product

question 18

True/False

When both the demand and lead time of a product are variable,firms keep a higher safety stock level when compared to variations in only the demand or only the lead time.

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Definitions:

Fixed Costs

Business expenses that are not affected by the level of goods or services produced by the business, such as rent, salaries, and insurance.

Price-Taking

A market condition where individual buyers or sellers have no influence over the price of a product due to its abundance in the market and the presence of many competitors.

Bushel

A unit of volume that is used primarily in agriculture, equivalent to about 35.24 liters in the U.S. for dry goods.

Break-Even Price

The market price at which a firm earns zero profits.