Question

Among other things, the amount of safety stock carried will depend upon:

A) variability of demand during the lead time.
B) the frequency of reorder.
C) the service level desired.
D) all of the above
E) A and B above

Answer 1

The amount of safety stock carried will depend upon the variability of demand during the lead time, the frequency of reorder, and the service level desired.

Step-by-step explanation:

The amount of safety stock carried will depend upon the variability of demand during the lead time, the frequency of reorder, and the service level desired. The amount of safety stock carried will depend upon the variability of demand during the lead time, the frequency of reorder, and the service level desired.

For example, if the demand for a product is highly variable during the lead time, it would be prudent to carry a higher amount of safety stock to protect against stockouts. Additionally, if the frequency of reorder is low, it may be necessary to carry more safety stock to ensure an adequate supply. Lastly, if a higher service level is desired (e.g., 99% fill rate), it would require carrying more safety stock to meet customer demand.