A flexible policy is most appropriate when carrying costs are low relative to shortage costs.

Question

Quizplus · Accepted Answer

A flexible policy allows for adjustments in inventory levels based on demand, which is beneficial when shortage costs (costs incurred from not meeting demand) are high compared to carrying costs (costs associated with holding inventory), as it minimizes the risk of stockouts and the high costs associated with them.

A Flexible Policy Is Most Appropriate When Carrying Costs Are