Question

1) List and Describe five (5) factors that can influence the amount of safety stock that should be carried. Be sure to give complete descriptions.

Answer 1

ANSWER :

Safety stock refers to the additional stock conveyed by an organization so as to keep away from any issues related with vulnerability in flexibly (crude materials, segments or subassemblies) or request (last item).

The amount of safety stock carried by company depends upon the following factors :

Desired service level :

If there should arise an occurrence of higher help levels, an organization needs to keep up enormous measure of wellbeing stock. It helps in obliging for the times of Increased interest.

Reorder frequency :

If there should arise an occurrence of continuous requests, an organization can keep up littler size of security stock as they can figure the interest with more precision. Along these lines, they don't require conveying enormous measure of additional stock.

Variability of demand during lead time :

In the event of higher fluctuation of interest during the lead time, a company needs to keep up enormous amounts of wellbeing stock. It would help them in managing the gigantic varieties sought after.

Length of lead time :

If there should arise an occurrence of longer lead times, an organization needs to keep up huge amount of wellbeing stock, because of huge hole between the request frequencies.

Safety stock prerequisite of an organization Is straightforwardly related with the length of the lead time. Longer the lead time, it would be increasingly hard for an organization to decide the future interest with assurance. Because of which, the organization needs to keep up more significant levels of security stock.

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