Practice Test Geeks(CIM) Certified Inventory Manager Practice Test
← All CIM Flashcard Decks

Safety Stock & Reorder Points Flashcards

7 cards from real CIM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Safety Stock & Reorder Points flashcards as text

  1. A retailer's lead time demand averages 500 units with a standard deviation of 40 units. At a 99% service level (z = 2.33), what is the safety stock?

    Answer: 93.2 units

    Safety stock = z × σ = 2.33 × 40 = 93.2 units.

  2. Which of the following would cause a company to REDUCE its safety stock levels?

    Answer: Supplier lead times become more consistent and predictable

    More consistent lead times reduce variability, lowering the uncertainty safety stock is designed to buffer against.

  3. In the formula ROP = (Average daily demand × Lead time) + Safety stock, what does the first term represent?

    Answer: Expected demand during the replenishment lead time

    Average daily demand multiplied by lead time gives the expected (average) consumption while waiting for the order to arrive.

  4. A manager wants to reduce inventory costs but maintain service levels. Which strategy best addresses safety stock without changing service level targets?

    Answer: Work with suppliers to reduce lead time variability

    Reducing lead time variability lowers σ in the safety stock formula, cutting safety stock while maintaining the same service level.

  5. Which of the following best defines 'cycle service level' in the context of safety stock?

    Answer: The probability of not stocking out during a single replenishment cycle

    Cycle service level (CSL) measures the probability of avoiding a stockout in any given replenishment cycle.

  6. An item has an average daily demand of 30 units, a lead time of 5 days, and desired safety stock of 75 units. What is the reorder point?

    Answer: 225 units

    ROP = (30 × 5) + 75 = 150 + 75 = 225 units.

  7. A supply chain analyst notices that safety stock is consistently consumed even during normal operations. What does this suggest?

    Answer: Safety stock is set too low or demand/lead time estimates are inaccurate

    If safety stock is regularly depleted, it signals that the buffer is insufficient for actual variability, or the averages used are underestimates.