Question

the required safety inventory group of answer choices remains stable with an increase in the lead time and the standard deviation of periodic demand. decreases with an increase in the lead time and the standard deviation of periodic demand. increases with an increase in the lead time and the standard deviation of periodic demand. increases with a decrease in the lead time and the standard deviation of periodic demand.

Answer 1

Safety inventory requirements increase with higher lead times and greater standard deviations in periodic demand to protect against the risk of stockouts.

Step-by-step explanation:

The required safety inventory increases with an increase in the lead time and the standard deviation of periodic demand. This is because a longer lead time creates a greater chance of variability and uncertainty in the demand, potentially leading to stockouts if safety inventory is not increased accordingly.

Similarly, a higher standard deviation indicates more variability and unpredictability in demand, which once again suggests a need for a larger safety inventory to guard against the higher risk of stockouts.