A reduction in supply can help dramatically reduce safety inventory required without hurting product availability. True or False?
Understand the Problem
The question presents a statement regarding the relationship between a reduction in supply and its effect on safety inventory and product availability. You need to determine whether the statement is true or false.
Answer
False
The statement is false. A reduction in supply typically increases the risk of stockouts and can hurt product availability, thus requiring more safety stock, not less.
Answer for screen readers
The statement is false. A reduction in supply typically increases the risk of stockouts and can hurt product availability, thus requiring more safety stock, not less.
More Information
Safety stock is held to buffer against uncertainties in supply and demand. Reducing supply increases uncertainty.
Tips
The question includes the phrase 'without hurting product availability'. This should be the first thing you analyze to determine if the statement is true or false.
Sources
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