At the annual managers' planning conference, Andrea Conrad asks the other managers to consider her proposal to increase the quantity of inventory to a five-week supply in order to increase the percentage of completely filled customer orders from 85% to 90%. She states that she is willing to trade off the ____ incurred for the positive effect of better customer service.

Question

Quizplus · Accepted Answer

Increasing the quantity of inventory to a five-week supply will require higher warehousing costs. However, this trade-off is acceptable for better customer service by increasing the percentage of completely filled customer orders from 85% to 90%. Lower response time, higher transportation costs, higher order processing costs, and higher performance levels are not related to the proposal.

At the Annual Managers' Planning Conference, Andrea Conrad Asks the Other