Final answer:
An increase in customer demand uncertainty will indeed result in greater lead time demand uncertainty, as the variability in customer demand makes forecasting more challenging. In the financial market, increased demand or supply for loans will lead to more loans being made and received, while a rise in supply typically leads to lower interest rates. Option a)true is the correct answer.
Step-by-step explanation:
The subject of the question pertains to the impact of changes in customer demand uncertainty on lead time demand uncertainty. The statement implies that an increase in the uncertainty surrounding customer demand, other factors being constant, will result in a greater uncertainty concerning the demand during the lead time. This is true since lead time demand is a function of customer demand; thus, variability in customer demand typically increases the difficulties in forecasting lead time demand. When businesses have less predictability in customer demand, they must account for a wider range of possibilities in their inventory and supply chain management, leading to greater lead time demand uncertainty.
Financial Market Influence on Loans and Interest Rates
Addressing the separate reference question, in the financial market, changes that can lead to an increase in the quantity of loans made and received would include both a rise in demand for loans and a rise in supply of loanable funds. When demand for loans increases, borrowers are willing to take loans at higher interest rates, leading to a higher quantity of loans. Similarly, when the supply of loanable funds increases, lenders are willing to provide more loans at lower interest rates, also increasing the quantity of loans. Conversely, changes that would lead to a decline in interest rates can be attributed to a fall in demand for loans or a rise in supply of loanable funds. A decrease in demand for loans means that borrowers are not as willing to borrow at higher interest rates, putting downward pressure on the rates. An increase in supply of loanable funds means there is more capital available to lend, which can also result in lower interest rates. As for a fall in supply, it would typically lead to higher interest rates as the funds become scarcer and more valuable.