Question

We discussed the different types of inventory in a supply chain: Safety stock, Cycle stock, Seasonal stock, and Pipeline stock.

Which of the following statements is NOT correct?

Select one:

a. Safety stock is present in a supply chain to buffer against demand uncertainty and prevent stock-outs.

b. Cycle stock is present in a supply chain to mitigate the fixed costs of ordering, producing, or transporting.

c. Seasonal stock is present in a supply chain when capacity is flexible and can be easily changed to meet seasonal demand.

d. Pipeline stock is present in a supply chain as it is transported along the chain due to finite production and transport lead times.

Answer 1

b. Cycle stock is present in a supply chain to mitigate the fixed costs of ordering, producing, or transporting.

Cycle stock is the amount of stock necessary to meet customer demand, from the time you reorder stock until it arrives.

Answer 2

b. Cycle stock is present in a supply chain to mitigate the fixed costs of ordering, producing, or transporting