higher
lower
medium
fixed
Answer is Right!
Answer is Wrong!
The correct answer is: A. higher
The reorder level is the level of inventory at which a new order is placed. It is set higher than the safety level to ensure that there is always enough inventory on hand to meet demand. The safety level is the minimum level of inventory that must be on hand to avoid stockouts. It is set based on factors such as lead time, demand variability, and order quantity.
Here is a brief explanation of each option:
- A. higher. The reorder level is set higher than the safety level to ensure that there is always enough inventory on hand to meet demand.
- B. lower. The safety level is set lower than the reorder level to avoid unnecessary costs associated with carrying too much inventory.
- C. medium. The reorder level and safety level are not necessarily set at the same level. The reorder level is set based on factors such as lead time, demand variability, and order quantity, while the safety level is set based on factors such as stockout costs and carrying costs.
- D. fixed. The reorder level and safety level are not necessarily fixed. They can be adjusted based on changes in demand, lead time, or other factors.