Knowledge quiz

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

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

Choose the correct answer.

The backlog will increase.

The backlog will be reduced.

Will batch size affect total inventory?

Choose the correct answer.

Batch size will not affect total inventory.

Batch size might affect total inventory.

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

Choose the correct answer.

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

1) Normal distribution, 2) Fill rate

How can the coefficient of variation be calculated?

Choose the correct answer.

Through the integration of third-party solutions and application of Excel formulas.

The CV calculation operator reads the forecast and sales signals, typically in weeks. However, SAP IBP for inventory is very flexible, and allows any bucket length including lead time. A multistage inventory optimization operator reads the standard deviation and the forecast in weeks to calculate the standard deviation as the multiplication of CV by the forecast.

We cannot calculate the coefficient of variation.

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.

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

Choose the correct answer.

The backlog will increase.

The backlog will be reduced.

What does multistage inventory optimization achieve?

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SAP IBP for inventory simultaneously optimizes inventory across the end-to-end supply chain, constrained by customer service requirements with the lowest inventory holding cost. That means: over-buffering elimination, intra-site fill rate optimization, and demand variability propagation.

SAP IBP for demand simultaneously optimizes inventory by customer service requirements with the highest inventory holding cost. That means: over-buffering elimination, intra-site fill rate optimization, and demand variability propagation.

SAP IBP for response and supply optimizes inventory across the end-to-end supply chain, constrained by customer service requirements with the lowest inventory holding cost. That means: over-buffering elimination, intra-site fill rate optimization and demand variability propagation.

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

Choose the correct answer.

The backlog will increase.

The backlog will be reduced.

Why is it important to consider time-varying targets?

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Time refines the following calculations: safety stock and target inventory position. That is, time-varying safety stock is equal to the multiplication factor corresponding to the service level target, multiplied by the square root of the sum of each forecast error to the second power, until the exposure period is addressed. While time-varying inventory position is defined as the meet exposure forecast, plus the time-varying safety stock.

Time does not change anything within the calculations.

Time is only important if we are working with time-dependent key figures

10.

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

Choose the correct answer.

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.