Certified Supply Chain Professional (CSCP) Practice Exam

What does safety stock set at a fixed level refer to?

1. Setting safety stock according to demand fluctuations

2. Setting safety stock at a variable level based on trends

3. Setting safety stock at a fixed level

4. Setting safety stock as inventory is depleted

The correct answer is: Setting safety stock at a fixed level

Setting safety stock at a fixed level means determining a specific quantity of inventory that is maintained regardless of demand fluctuations or variability in supply. This approach provides a stable buffer against stockouts, ensuring that there is always an adequate supply of products available to meet customer needs. By keeping safety stock at a constant level, organizations can simplify inventory management and forecasting, making it easier to predict how much stock will be on hand. This can be particularly useful in environments with predictable demand patterns or stable supply chains where the variability is relatively low. In contrast, the other options involve dynamic or variable approaches to setting safety stock, like adjusting levels based on fluctuations in demand or trends over time. While these methods can offer more responsiveness to changing market conditions, they typically require more sophisticated forecasting techniques and may introduce complexity to inventory management.