Question

The goal of inventory management is to ensure that the stock-out rate is less than 10 percent, which means that the business runs out of less than 10 percent of its inventory items in any given year. True or false?

Answer 1

Inventory management aims to minimize stock-outs and balance inventory levels, but a stock-out rate below 10 percent is not a universal goal for all businesses, rather it's a specific aim that varies with company objectives.

Step-by-step explanation:

The statement is partially true. The goal of inventory management is indeed to minimize stock-outs and maintain the balance between overstocking and running out of products. While keeping the stock-out rate below 10 percent is a specific goal that some businesses might aim for, it is not a universal target for all inventory management systems. Instead, the objective is to adjust inventory levels according to demand forecasts and buffer stocks to achieve a stock-out rate that aligns with the company's service level objectives and operational efficiency goals.