Practice Quiz

Supply Chain Management

Category - Inventory

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Safety inventory is an inventory carried for the purpose of satisfying demand that ________________ for a given period.
  1. Exceeds the amount forecasted.
  2. Exceeds the supply forecasted.
  3. Diminishes the demand forecasted.
  4. Diminishes the supply forecasted.
Explanation
Answer: A - Safety Inventory is inventory carried for the purpose of satisfying demand that exceeds the amount forecasted for a given period. It is carried because demand forecasts are uncertain and a product shortage may result if actual demand exceeds the forecast demand.
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