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Which one of the following statements is true regarding - the concerns of suppliers?

a) it exists just in case something goes wrong.
b) it is the minimum inventory necessary to keep a perfect system running.
c) it hides variability.
d) it is minimized with large lot production.
e) it increases if setup costs decrease.

1 Answer

4 votes

Final answer:

The true statement about suppliers' concerns is that inventory hides variability, allowing for consistent supply despite demand or production fluctuations.

Step-by-step explanation:

The concerns of suppliers and production strategies involve various factors such as inventory levels, production costs, and efficiency. The true statement regarding the concerns of suppliers is that inventory hides variability. This means that by maintaining a certain level of inventory, a supplier can buffer against fluctuations in demand or production issues, ensuring a steady supply is available for the production process. Larger quantities of production, often achieved through economies of scale, can lead to reduced costs per unit. However, this concept is separate from how inventory functions to manage variability. The just-in-time delivery system mentioned is a strategy to reduce inventory levels and improve quality control, but it's tailored for situations where suppliers are in close proximity to the main manufacturing plant.

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