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Which of the following has the greatest impact on safety stock? Multiple Choice Average daily demand...

Which of the following has the greatest impact on safety stock?

Multiple Choice

  • Average daily demand

  • Standard deviation of daily demand

  • Average replenishment lead time

  • Standard deviation of lead time

business   Operations-Management   
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Answer #1

The correct answer is "Average replenishment lead time".

Safety stock refers to extra stock level that is maintained in order to eliminate the risk of shortage of stocks because supply and demand may vary. Safety stock is calculated based on the lead time and demand. Lead time refers to the time when the order is placed or produced till the time the item is ready for sale or delivery to the customers.

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