CIM Safety Stock & Reorder Points 5

Question 1

A company switches from a make-to-stock to a make-to-order strategy. What is the likely effect on safety stock requirements?

Accepted Answer

Safety stock decreases because production is triggered by actual orders

Answer

Make-to-order eliminates finished goods uncertainty since production only starts once an order is received, reducing or eliminating finished goods safety stock.

Question 2

Which metric measures the percentage of order lines (or units) shipped complete from available stock, and is distinct from cycle service level?

Accepted Answer

Fill rate

Answer

Fill rate measures what fraction of demand is met immediately from stock, covering partial fulfillment scenarios unlike cycle service level.

Question 3

What is the effect of using a higher safety factor (z-score) on inventory carrying costs?

Accepted Answer

Carrying costs increase because more safety stock is held

Answer

Higher z-scores yield more safety stock, which must be stored and financed, increasing inventory carrying costs.

Question 4

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?

Accepted Answer

Safety stock can be reduced because supply visibility lowers uncertainty

Answer

VMI improves supply chain visibility, reducing lead time and demand uncertainty and therefore safety stock needs.

Question 5

In a multi-echelon supply chain, where is safety stock most efficiently positioned to minimize total system inventory?

Accepted Answer

At the echelon with the greatest demand uncertainty and longest lead times

Answer

Multi-echelon optimization places safety stock where it provides the greatest service benefit relative to cost, typically where variability is highest.

(CIM) Certified Inventory Manager Practice Test

(CIM) Certified Inventory Manager Practice Test

CIM Safety Stock & Reorder Points 5