The Purpose of Safety Stock Is to

question 43

Multiple Choice

The purpose of safety stock is to

• A) replace failed units with good ones
• B) eliminate the possibility of a stockout
• C) eliminate the likelihood of a stockout due to erroneous inventory tally
• D) control the likelihood of a stockout due to the variability of demand during lead time
• E) protect the firm from a sudden decrease in demand

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Definitions:

Price Controls

Government-imposed limits on the prices charged for goods and services in a market, aimed at maintaining affordability or preventing inflation.

Hurricane

A powerful tropical cyclone with heavy rain and strong winds, originating over warm ocean waters and potentially causing significant damage upon landfall.

Availability

The state of being able to be used or obtained, typically referring to goods, services, or resources.