It is common to measure stockouts in terms of the number or percentage of inventory items for which there is no inventory on hand at the time of demand.

a. True
b. False

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The answer is True.

Stock-outs are commonly measured as the quantity or percentage of inventory items for which there is no inventory on hand at the time of demand.

When the carrying cost of inventory is expressed as a percentage?

  • Carrying costs are always represented as a proportion of total inventory value.
  • Carrying costs are always represented as a proportion of total inventory value.
  • They are equivalent to the inventory holding total divided by the total inventory value multiplied by 100.
  • The quantity of inventory carried in excess of the predicted demand is known as safety stock. If demand for an item is regularly distributed, we plan for twice the average demand and hold safety stock inventories equal to two standard deviations.

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