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
A company switches from a make-to-stock to a make-to-order strategy. What is the likely effect on safety stock requirements?
Answer: Safety stock decreases because production is triggered by actual orders
Make-to-order eliminates finished goods uncertainty since production only starts once an order is received, reducing or eliminating finished goods safety stock.
Which metric measures the percentage of order lines (or units) shipped complete from available stock, and is distinct from cycle service level?
Answer: Fill rate
Fill rate measures what fraction of demand is met immediately from stock, covering partial fulfillment scenarios unlike cycle service level.
What is the effect of using a higher safety factor (z-score) on inventory carrying costs?
Answer: Carrying costs increase because more safety stock is held
Higher z-scores yield more safety stock, which must be stored and financed, increasing inventory carrying costs.
A manufacturer's supplier offers to share real-time inventory and production data. How does this vendor-managed inventory (VMI) relationship typically affect safety stock?
Answer: Safety stock can be reduced because supply visibility lowers uncertainty
VMI improves supply chain visibility, reducing lead time and demand uncertainty and therefore safety stock needs.
In a multi-echelon supply chain, where is safety stock most efficiently positioned to minimize total system inventory?
Answer: At the echelon with the greatest demand uncertainty and longest lead times
Multi-echelon optimization places safety stock where it provides the greatest service benefit relative to cost, typically where variability is highest.
A company recalculates its reorder point after discovering its demand forecast has been consistently 15% below actual demand. What adjustment is needed?
Answer: Increase the reorder point to reflect higher actual demand
A systematic under-forecast means the ROP is too low, and increasing it corrects for the bias in expected lead time demand.
Which of the following scenarios would result in the HIGHEST reorder point, all else being equal?
Answer: High average demand, long lead time, high demand variability, high service level target
All four factors — high demand, long lead time, high variability, and high service level — each independently increase the ROP, so their combination yields the highest ROP.