CPIM Practice Exam

What should be done with safety stock if the lead time for resupply increases but the customer service level needs to remain unchanged?

1. Reduce safety stock levels.

2. Keep safety stock levels the same.

3. Increase safety stock levels.

4. No safety stock should be held in the first place.

The correct answer is: Increase safety stock levels.

When the lead time for resupply increases, it means that there is a longer period during which stock must be maintained to ensure that customer demand can still be met without delays. To keep the customer service level unchanged, it becomes essential to compensate for this longer lead time. Increasing safety stock levels serves as a buffer to account for variability in demand during the extended lead time. This ensures that there is enough product available to meet customer needs, even if there are fluctuations in demand or delays in restocking. Therefore, maintaining the desired service level without compromising inventory availability requires an adjustment by increasing safety stock levels. The other options would not align with the need to maintain service levels: reducing safety stock would create a risk of stockouts during longer lead times, keeping it the same might not adequately cover the increased uncertainty, and eliminating safety stock altogether would leave the operation vulnerable to demand spikes or delays in supply.