Which one of the following statements is best?
A) When no safety stock is maintained, stockouts will occur during approximately 50 percent of the cycles.
B) The level of safety stock maintained decreases when the desired cycle- service level increases.
C) The level of safety stock maintained is greater if mean absolute deviation (MAD) is used rather than standard deviation in estimating forecast errors.
D) The level of safety stock maintained decreases when the standard deviation of demand during lead time increases.

Question

Quizplus · Accepted Answer

When no safety stock is maintained, stockouts will occur during approximately 50 percent of the cycles because there is no buffer to protect against variability in demand or lead time.

Which One of the Following Statements Is Best