Which one 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)When demand is uncertain and no safety stock is maintained, stock outs will occur during approximately 50 percent of the cycles.

Question

Quizplus · Accepted Answer

When demand is uncertain and no safety stock is maintained, stock outs will occur during approximately 50 percent of the cycles because there is no buffer to account for variability in demand.

Which One of the Following Statements Is True