Final answer:
Safety inventory requirements increase with higher lead times and greater standard deviations in periodic demand to protect against the risk of stockouts.
Step-by-step explanation:
The required safety inventory increases with an increase in the lead time and the standard deviation of periodic demand. This is because a longer lead time creates a greater chance of variability and uncertainty in the demand, potentially leading to stockouts if safety inventory is not increased accordingly.
Similarly, a higher standard deviation indicates more variability and unpredictability in demand, which once again suggests a need for a larger safety inventory to guard against the higher risk of stockouts.