CPIM Practice Exam

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Prepare for the CPIM Exam. Study with flashcards and multiple choice questions, each question has hints and explanations. Get ready for your exam!

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What benefit does air shipping provide compared to water shipping?

Lower carrying costs regardless of lead time.
Reduced safety stock levels due to shorter lead times.
A greater ability to ship more units per load.
More flexibility in shipping schedules.

The correct answer is: Reduced safety stock levels due to shorter lead times.

Air shipping offers a significant advantage in terms of lead time, which in turn impacts safety stock levels. Since air transportation is considerably faster than water shipping, organizations can minimize the amount of inventory they need to hold as safety stock. This is because products can be flown in quickly to meet customer demand, allowing companies to operate with leaner inventory levels. By reducing lead times, businesses can respond more swiftly to market changes and demand fluctuations, effectively lowering their reliance on safety stock while still maintaining service levels. In contrast, while water shipping may be more cost-effective in terms of carrying larger quantities, it inherently involves longer transit times, necessitating higher safety stock levels to buffer against stock-outs. Thus, the quicker transit afforded by air shipping directly correlates to a reduction in needed safety stock, aligning inventory management practices with more dynamic supply chain needs.