APICS Certified in Logistics, Transportation and Distribution (CLTD) — Question 24

Which of the following statements best describes the relationship between order cycle time and inventory?

Answer options

• A. The shorter the order cycle length, the more inventory is required to be held
• B. The shorter the order cycle length, the less inventory is required to be held
• C. The longer the order cycle length, the less inventory is required to be held
• D. The changes made to the order cycle has little/no impact on inventory levels

Correct answer: C

Explanation

The correct answer, C, indicates that a longer order cycle allows for less inventory to be maintained since orders can be placed less frequently. Options A and B are incorrect because they misrepresent the relationship between order cycle length and inventory needs. Option D is also incorrect as it overlooks the significant impact that order cycle changes can have on inventory management.