Lead times and delivery times can create problems also. Longer times can _______________________. The extended lead time also might push back the date at which a firm is able to introduce new products to the market.
A) increase inventory and drive down carrying costs
B) increase inventory needs and drive up carrying costs
C) reduce inventory needs and drive up ordering costs
D) increase inventory needs and drive up ordering costs
E) expand inventory and drive up production costs

Question

Quizplus · Accepted Answer

Longer lead times mean that companies need to hold more inventory to avoid stockouts, which increases inventory needs and drives up carrying costs. It can also increase the risk of overstocking if demand does not meet anticipations, which can lead to additional costs to manage excess inventory. This can be especially problematic in industries where products have a short shelf life or there are frequent new product releases.

Lead Times and Delivery Times Can Create Problems Also