Inventory Management MCQs

Buffer/safety inventory – the basic level of inventory kept for emergencies. A buffer is required because both demand and lead time will fluctuate and predictions can only be based on best estimates

April 27, 2022

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Buffer/safety inventory – the basic level of inventory kept for emergencies

Q. Buffer/safety inventory – the basic level of inventory kept for emergencies. A buffer is required because both demand and lead time will fluctuate and predictions can only be based on best estimates.

A. The above statement is correct

B. The above statement is incorrect

Answer: The above statement is correct

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Buffer/safety inventory – the basic level of inventory kept for emergencies. A buffer is required because both demand and lead time will fluctuate and predictions can only be based on best estimates

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If the supply lead time is uncertain, and demand during the lead time is also uncertain, there should be a safety level of inventory. A company may wish to ensure that they are never out of stock. The reorder level to achieve this is found as:

Buffer/safety inventory – the basic level of inventory kept for emergencies. A buffer is required because both demand and lead time will fluctuate and predictions can only be based on best estimates

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The objective of good inventory management is to determine

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