The Most Common Solution to Supply Chain Uncertainties Is to Build

question 23

True/False

The most common solution to supply chain uncertainties is to build inventories or safety stock as insurance, but that can cause the bullwhip effect in the supply chain.

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Definitions:

Salvage Value

The estimated value that an asset will realize upon its sale at the end of its useful life, also considered in depreciation calculations.

Asset Improvements

Enhancements or upgrades made to a company's assets to increase their efficiency, productivity, or value.

Ordinary Maintenance

Ordinary maintenance involves the routine upkeep and repairs necessary to maintain assets in their current condition, without significantly enhancing their value or extending their life.

Asset Improvements

Expenditures made to increase the service life, operating efficiency, or productive capacity of an asset.