Which of the following statements is TRUE?
A) The level of safety stock maintained decreases when the desired cycle service level increases.
B) The level of safety stock maintained decreases when the standard deviation of demand during lead time increases.
C) In a fixed-period inventory system, the value of Q is kept the same from one cycle to another.
D) In a fixed-order-quantity system, the reorder point is the average demand during the lead time, plus the additional safety stock when demand is uncertain.

Question

Quizplus · Accepted Answer

In a fixed-order-quantity system, the reorder point is the average demand during the lead time, plus the additional safety stock when demand is uncertain. Choice A is false because the level of safety stock increases when the desired cycle service level increases. Choice B is false because the level of safety stock increases when the standard deviation of demand during lead time increases. Choice C is false because in a fixed-period inventory system, the value of Q may vary from one cycle to another depending on the demand during that cycle.

Which of the Following Statements Is TRUE