Certified Supply Chain Professional (CSCP) Practice Exam

When applying safety stock methods, which scenario could lead to stockouts?

1. Accurate forecasting combined with high inventory levels

2. High variability of demand during lead times

3. Regular fixed ordering patterns

4. Low lead times and consistent demand

The correct answer is: High variability of demand during lead times

When applying safety stock methods, high variability of demand during lead times is a critical factor that can lead to stockouts. This situation occurs because the unpredictability in demand can exceed the safety stock level that was calculated based on historical data. In instances where the demand fluctuates significantly, the safety stock, even if calculated accurately, may not be sufficient to cover the unexpected increases in demand. Lead times add another layer of complexity; if the demand variation is high while the inventory is being replenished, there is a greater risk that stock will run out before new inventory arrives. Additionally, if the variability continues to persist or increase, relying solely on historical averages could misinform stock levels, increasing the likelihood of stockouts during those peak demand periods. Other scenarios present more stable conditions with a lower risk of stockouts. Accurate forecasting combined with high inventory levels typically provides a buffer against demand variability, regular fixed ordering patterns can help in maintaining consistent inventory flows, and low lead times with consistent demand reduce the risks of running out of stock since replenishment occurs quickly and predictably.