The amount of safety stock that a firm carries depends upon
A) the predictability of inventory usage.
B) the time period necessary to fill inventory orders.
C) the riskiness of the storage facility.
D) a and b are correct

Question

Quizplus · Accepted Answer

The amount of safety stock that a firm carries depends on the predictability of inventory usage and the time period necessary to fill inventory orders. These factors determine the risk of stockouts or delays in fulfilling orders, which safety stock is meant to mitigate. The riskiness of the storage facility may also be a relevant factor but is not as directly related to safety stock. Therefore, both choices A and B are correct.

The Amount of Safety Stock That a Firm Carries Depends