Inventory needs under a derived-demand inventory system are:
A)primarily dependent upon the competitive demands placed on a firm's suppliers.
B)based on the anticipated demand for the finished product.
C)based on minimizing the cost of restocking inventory.
D)held constant over time.
E)determined by a kanban system.

Question

Quizplus · Accepted Answer

Under a derived-demand inventory system, inventory needs are based on the anticipated demand for the finished product. This means that inventory levels are dependent on the level of demand for the end product that the inventory is intended to support. The inventory levels need to be high enough to meet the demand for the finished product, but not so high that they lead to unnecessary costs associated with restocking inventory. The competitive demands placed on a firm's suppliers may impact inventory levels in some cases, but this is not the primary consideration under a derived-demand inventory system. Kanban systems can be used to manage inventory levels, but they are not the only method used in a derived-demand inventory system.

Inventory Needs Under a Derived-Demand Inventory System Are