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Why is DDLT important in order policy? Multiple Choice

a. There needs to be enough inventory on hand to get through the time to replenish.
b. There needs to be safety stock to deal with variation when ordering long leadtimes.
c. Customers are unruly so inventory should be stocked at all times.
d. None of the above answers are correct.

1 Answer

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Final answer:

The importance of DDLT in order policy is that there must be enough inventory to meet demand during the time it takes to replenish stock. This helps in preventing stock outs and maintaining service levels. DDLT doesn't directly address safety stock, but implies properly managing inventory levels to cover expected demand and variability.

Step-by-step explanation:

DDLT, or Demand During Lead Time, is a critical aspect of order policy in supply chain management. Answering the student's multiple-choice question, the correct option is: a. There needs to be enough inventory on hand to get through the time to replenish. When calculating the amount of inventory needed, DDLT quantifies the expected customer demand during the lead time, which is the period necessary to replenish the inventory. This includes both regular demand and any potential variations during that period; hence, maintaining adequate inventory to cover DDLT is essential in preventing stock outs.

With regard to option b, although safety stock is indeed a crucial component in managing lead time variability, it is not what DDLT directly refers to. Option c is incorrect as well because the statement about customers being unruly does not professionally address the logistical reasons behind the need for accurate inventory levels based on DDLT. The supply chain advancements in technology and transportation methods, as well as the dire need to incorporate fair labor policies, are all integral to strengthening supply chain resiliency and efficiency, allowing for more accurate forecasting and management of DDLT issues.

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