ENTREPRENEURIAL OPERATIONS
INVENTORY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The maximum order level should not exceed the safety stock.
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TRUE
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FALSE
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Either A or B
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None of the above
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Explanation:
Detailed explanation-1: -The reorder level of stock is the fixed stock level that lies between the maximum and minimum stock levels.
Detailed explanation-2: -maximum inventory levels = reorder point + reorder quantity – [minimum consumption × minimum lead time].
Detailed explanation-3: -What is Maximum Stock Level? The maximum stock level is a not-to-exceed amount used for inventory planning. This stock level is based on a calculation of the cost of storage, standard order quantities, and the risk of inventory becoming obsolete or spoiling with the passage of time.
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