Certified Supply Chain Professional (CSCP) Practice Exam

Which variable does NOT influence the amount of safety stock to maintain?

1. Organizational requirements

2. Location of the warehouse

3. Length of lead time

4. Variability of demand during lead time

The correct answer is: Location of the warehouse

The amount of safety stock to maintain primarily depends on several key factors, including organizational requirements, length of lead time, and variability of demand during lead time. Each of these elements directly impacts how much buffer inventory is necessary to meet customer demand without stockouts. Organizational requirements consider the level of service or fill rate the company aims to achieve, which significantly dictates safety stock levels. For instance, a company with a high customer service requirement will generally need to maintain higher safety stock to meet demand consistently. The length of lead time plays a crucial role since longer lead times increase uncertainty. A longer time frame between ordering and receiving inventory often necessitates more safety stock to cover potential fluctuations in demand or delays in supply. Variability of demand during lead time is another critical factor. High variability means that customer demand can swing widely, which requires more safety stock to ensure that the organization can still fulfill orders during periods of unexpected spikes in demand. On the other hand, while the location of the warehouse can influence logistical considerations and costs, it does not inherently affect the amount of safety stock required. The safety stock is more directly influenced by demand patterns and supply chain dynamics rather than geographical considerations. Thus, while it is an important logistical factor, it is not a determining