Knowledge quiz

It's time to put what you've learned to the test, get 8 right to pass this unit.

What two important variables construct the foundation for the safety stock calculation?

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1) Forecast Error; and, 2) Target Service Level

1) Normal distribution, 2) Fill rate

What would you reply to the following statement: 'If I increase the batch size, I need to increase safety stock as well!'

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Yes, an increasing batch size should automatically lead to higher safety stock.

No, there is no dependency between batch size and safety stock.

No, it is quite the opposite. With an increasing batch size, I might be able to reduce the safety stock.

With fixed internal service level, what happens to the backlog when internal demand mean goes up?

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The backlog will increase.

The backlog will be reduced.

How does the forecast error can be modeled?

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Chi function

Through an asymmetric or a symmetric gamma function; if symmetric, a normal distribution can be used

Will batch size affect total inventory?

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Batch size will not affect total inventory.

Batch size might affect total inventory.

With fixed internal service level, what happens to backlog when exposure goes up?

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The backlog will increase.

The backlog will be reduced.

What is an exposure period?

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The exposure of within the standard deviation is equal to the lead time plus the periods between replenishment.

A period where we are protected against changes.

How can we calculate the safety stock on single-stage scenarios?

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Via Excel formulas that everyone can invent.

Safety stock can be calculated as the multiplication of a factor, corresponding to service level, by the forecast error, by the square root of the exposure period (lead time plus periods between replenishment).

With fixed internal service level, what happens to backlog when internal demand standard deviation goes up?

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The backlog will increase.

The backlog will be reduced.

10.

What happens to the backlog when the internal service level goes up?

Choose the correct answer.

The backlog will go up as well.

The backlog will be reduced.