Question

When there can be potential disruptions in the supply chain, such as strikes, bad weather, or natural disasters, warehouses can help companies support their operations by:

Question 95 options:

	Manufacturing extra products.
	Carrying safety stocks.
	Reducing labor costs.
	Increasing inventory turns
	Reducing service levels

Answer 1

The correct answer is safety stock. The role of safety stock is to ensure that there is some % of extra inventory that is kept to face the unforeseeable and unfavourable conditions in which stock level may dry up or logistics is stopped or demand goes for a toss etc., and hence warehouses ensure that extra safety stock is carried out to mitigate and stay strong in the market during such situations.

Warehouses donot manufacture products and also they donot reduce labour cost and hence these two options are incorrect. Similarly for all other options as they are not the primary roles of a warehouse.