Asked by Alexandra Rosen on Jun 17, 2024
Verified
Raising the level of safety inventory increases product availability and thus the margin captured from customer purchases.
Safety Inventory
Extra inventory kept on hand to protect against uncertainties in demand or supply.
Product Availability
The extent to which goods or services can be purchased or accessed as desired by customers at a given time.
Customer Purchases
Transactions where consumers buy goods or services from businesses, exchanging money for products.
- Understand the crucial role product availability plays in elevating customer satisfaction and augmenting the profitability of the business.
- Pinpoint the factors that dictate the appropriate quantity of safety inventory and realize the concessions entailed.
Verified Answer
BJ
Brigham JacobsonJun 18, 2024
Final Answer :
True
Explanation :
Safety inventory is an additional stock of inventory that is held to protect against unexpected stockouts or demand spikes. By maintaining a higher level of safety inventory, the chances of stockouts are reduced, which can improve product availability and increase sales. This, in turn, can result in higher margin captured from customer purchases.
Learning Objectives
- Understand the crucial role product availability plays in elevating customer satisfaction and augmenting the profitability of the business.
- Pinpoint the factors that dictate the appropriate quantity of safety inventory and realize the concessions entailed.