Which of the following relationships hold true for safety stock?
A. the greater the risk of running out of stock, the smaller the safety of stock.
B. the larger the opportunity cost of the funds invested in inventory, the larger the safety stock.
C. the greater the uncertainty associated with forecasted demand, the smaller the safety stock.
D. the higher the profit margin per unit, the higher the safety stock necessary.
Answer:D
Which of the following relationships hold true for safety stock?
A. the greater the risk of running out of stock, the smaller the safety of stock. B. the larger the opportunity cost of the funds invested in inventory, the larger the safety stock. C. the greater the uncertainty associated with forecasted demand, the smaller the safety stock. D. the higher the profit margin per unit, the higher the safety stock necessary.