CIM Safety Stock & Reorder Points 3

Question 1

A firm has variable lead times with an average of 10 days and a standard deviation of 2 days. Average daily demand is 20 units. Which factor contributes to safety stock need in this scenario?

Accepted Answer

Lead time variability

Answer

Variable lead times create uncertainty about when stock will arrive, requiring safety stock to cover the variability.

Question 2

When both demand and lead time are variable, the combined standard deviation for safety stock calculations is best described as:

Accepted Answer

A function of both demand variability and lead time variability

Answer

Combined variability accounts for both demand and lead time standard deviations using a composite formula.

Question 3

A C-class item has high demand variability. How should safety stock policy typically differ from an A-class item?

Accepted Answer

C-class items may carry proportionally less safety stock due to lower value impact

Answer

ABC analysis typically applies tighter controls and higher service levels to high-value A-class items, while C-class items may receive simpler, leaner policies.

Question 4

Which term describes the point at which on-hand inventory equals the reorder point triggering a new purchase order?

Accepted Answer

Reorder point trigger

Answer

When inventory falls to the reorder point level, it triggers a replenishment order to be placed.

Question 5

A seasonal product has demand spikes during Q4. What is the most appropriate adjustment to safety stock during that period?

Accepted Answer

Increase safety stock to reflect higher demand variability

Answer

Higher demand variability during peak seasons increases the risk of stockouts, warranting higher safety stock.

(CIM) Certified Inventory Manager Practice Test

(CIM) Certified Inventory Manager Practice Test

CIM Safety Stock & Reorder Points 3