Which One of the Following Statements Is Best

question 170

Multiple Choice

Which one of the following statements is best?

• 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) When no safety stock is maintained, stockouts will occur during approximately 50 percent of the cycles.
• D) The level of safety stock maintained is greater if mean absolute deviation (MAD) is used rather than standard deviation in estimating forecast errors.

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Definitions:

Separate Legal Entity

A business structure that is legally distinct from its owners, allowing it to own assets, incur liability, and conduct business in its own name.

Corporation

A legal entity formed by individuals, shareholders, or shareholders, recognized as separate from its owners with its own rights and liabilities.

External Users

Individuals or entities outside of a company, such as investors, creditors, and regulatory agencies, who rely on financial statements to make decisions about the company.

Accounting Information

Financial data and statements that provide insight into a business's economic activities and financial health.