CPIM Practice Exam

Which scenario requires finished goods safety stock the least?

1. For a line of less popular board games at a central distribution center

2. For a popular line of make-to-order garage doors

3. For server cards sold just to corporate customers who order under strict quantity contracts

4. For dry pasta held at a regional distribution center

The correct answer is: For a popular line of make-to-order garage doors

In this context, the scenario involving the popular line of make-to-order garage doors requires finished goods safety stock the least primarily due to the nature of the order process and production strategy. Make-to-order processes inherently involve producing items only after an order is received, which means that there is no need to hold finished goods inventory. This production strategy aligns with customer demand and helps minimize excess inventory, leading to reduced carrying costs and less risk of obsolescence. Since the garage doors are produced specifically for incoming orders, the need for safety stock is minimized because there is a direct correlation between customer orders and production. In contrast, the other scenarios involve products that may face fluctuations in demand or require inventory to meet expected sales, hence necessitating safety stock. Holding finished goods safety stock in those cases is more critical to ensure customer satisfaction and minimize stockouts.