The required safety inventory increases with an increase in the lead time and the standard deviation of periodic demand.

Name: The required safety inventory increases with an increase in the lead time and the standard deviation of periodic demand.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

This is a well-known fact in inventory management. A longer lead time and a higher standard deviation of demand will increase the likelihood of stockouts, which requires having a larger safety stock to ensure adequate inventory availability.

The Required Safety Inventory Increases with an Increase in the Lead