Uncertainty about lead time in a probabilistic inventory model adds to the uncertainty about the demand during lead time.

Question

Quizplus · Accepted Answer

This statement is true. In a probabilistic inventory model, lead time demand is uncertain and can vary from one period to another. If the lead time is not known with certainty, it adds to the uncertainty about the demand during lead time, making it difficult for companies to forecast their inventory needs accurately. Therefore, companies should consider the variability of lead time in their inventory models to minimize the risks associated with uncertain demand.

Uncertainty About Lead Time in a Probabilistic Inventory Model Adds