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Use of a re-order level builds in a measure of
safety inventory and minimises the risk of the
organisation running out of inventory. (TRUE)Hello tutor!!
My question is why this statement is true ?
Because In my point of view, Buffer inventory minimises the risk of stock out and also what this statement means “Use of a re-order level builds in a measure of
safety inventory”Thank you
Having a reorder level means that you are placing a new order before you run out of inventory. That is automatically meaning that you have a buffer (or safety stock) to cover against a delay in receiving the new order.
Have you watched my free lectures on this? The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
Then sir my question is could they give any question in which safety stock has been already given and they ask to calculate re-order level ?
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