5. Firms can reduce the safety inventory they require by physically aggregating

Question

5. Firms can reduce the safety inventory they require by physically aggregating inventories in one location, which will also decrease transportation cost. A. True B. False For high-demand products with high value, both cycle inventory and safety inventory should be disaggregated and inexpensive mode of transportation should be used to replenish the inventories. 6. A. True B. False It is crucial that suppliers are actively involved during design, because about 20 percent of the cost of a product is determined at this stage. 7. A. True B. False

Explanation / Answer

5. False. Transportation cost will increase when inventory of aggregated.

6. False. Safety inventory should be aggregated to meet demand.

7. True. Yes because it should be feasible to everyone in the supply chain.

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