The appropriate level of safety inventory is determined by the uncertainty of both demand and supply and the desired level of cycle inventory.

Question

Quizplus · Accepted Answer

The appropriate level of safety inventory is determined by the uncertainty of both demand and supply and the desired service level, not the level of cycle inventory. Cycle inventory is related to the quantity of goods ordered or produced in each batch, not directly to safety inventory decisions.

The Appropriate Level of Safety Inventory Is Determined by the Uncertainty