Question

A.
A BLANKET PURCHASE ORDER is used for _______.
Group of answer choices

multiple deliveries over a period of time.

an order covering one large purchase order.

service agreements.

an order that you are allowed to return.

B.
TRUE or FALSE: Steering wheels purchased by Ford are an example of dependent demand.
Group of answer choices

True

False

C.
TRUE or FALSE: Under the ABC inventory practice for managing your inventory - A items have the smallest amount of safety stock, while C items typically have the most safety stock.

Group of answer choices

True

False

D.
TRUE or FALSE: When both the demand and lead time of a product are variable, firms must keep a higher safety stock level compared to variations in just demand, to offer the same service level.
Group of answer choices

True

False

Answer 1

Q1 : multiple deliveries over a period of time.

Blanket Purchase Orders are purchase orders where the buyer and the seller, agree on the price to be charged for the goods or services over a period of time. The buyer can then place order for the goods or services multiple times over this period of time. Hence this is the correct answer

Q2 : True

This is true as the demand for steering wheels will rise or fall depending on the demand for the cars. Hence the demand for the steering wheels will be dependent on the demand of the cars.

Q3 : False

In ABC classification, the A items are the most important items and hence receive the highest amount of safety stock while C items are the least important items and hence receive the lowest amount of safety stocks. Hence the given statement is false.

Q4 : True

When demand is variable, there is no assurance about when the demand will be more. In addition, when the lead time is also variable, there is no guarantee that the new order placed to meet the variable demand will ensure that the products reach the firm in time. Hence in order to offer the same service level, the firm should keep higher safety stock to ensure that any spike in demand is met.