BUISENESS MANAGEMENT
INVENTORY CONTROL
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A P system requires more safety stock than a Q system
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A P system lends itself more to quantity discounts than does a Q system.
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A P system requires more administrative control and computer support than does a Q system.
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In a periodic review system, the value of Q is kept the same from one cycle to another.
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Detailed explanation-1: -A P system requires more safety stock than a Q system . Orders can be more easily combined to the same supplier . The Q system is more suited for quantity discounts and physical limitations .
Detailed explanation-2: -D. the higher the profit margin per unit, the higher the safety stock necessary. The answer is true regarding safety stock.
Detailed explanation-3: -Safety stock protects you against the sudden demand surges and inaccurate market forecasts that can happen during a busy or festive season. It serves as a cushion when the products you’ve ordered take longer to reach your warehouse than you expected.
Detailed explanation-4: -Safety stock is an additional quantity of an item held in the inventory to reduce the risk that the item will be out of stock. It acts as a buffer stock in case sales are greater than planned and/or the supplier is unable to deliver the additional units at the expected time.
Detailed explanation-5: -Safety stock is additional inventory stored in the warehouse in order to deal with contingencies related to changes in demand or supplier delays. The objective of safety stock is to prevent stockouts.