APSC 211 2nd Term 2023-2024: Safety Stock Definition
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Questions and Answers

What is the primary purpose of holding higher levels of safety stock in a supply chain?

  • To mitigate the impact of potential disruptions (correct)
  • To reduce inventory costs
  • To improve forecasting accuracy
  • To increase the level of production

    • Which of the following events would most likely require higher levels of safety stock in a supply chain?

  • A labor strike (correct)
  • A sale of excess inventory
  • A change in consumer preferences
  • A decrease in demand

    • What is the primary benefit of holding higher levels of safety stock in a supply chain?

  • Improving supply chain flexibility
  • Reducing the risk of stockouts (correct)
  • Reducing inventory turnover
  • Increasing the level of production

    • In what type of situation would holding higher levels of safety stock be most beneficial?

    <p>In a market with a high level of supply chain uncertainty</p> Signup and view all the answers

    What is the relationship between supply chain disruptions and safety stock levels?

    <p>Supply chain disruptions lead to higher safety stock levels</p> Signup and view all the answers

    Why do companies hold higher levels of safety stock in the face of supply chain disruptions?

    <p>To mitigate the impact of potential disruptions on customer service</p> Signup and view all the answers

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