Intended learning outcomes: Find out whether the safety stock level increases with increasing demand.
This exercise refers to Subsection 11.3.3.
True or false: The safety stock level increases with increasing demand.
Solution:
As the formula in Figure 11.3.3.7 shows, this statement is generally not correct. The safety stock depends on the standard deviation of the demand during the lead time. Increasing demand does not automatically increase either the standard deviation during the statistical period or the lead time.
Course section 11.7: Subsections and their intended learning outcomes
11.7.1 Exercise: ABC Category and ABC Classification
Intended learning outcomes: Determine meaningful ABC categories of some items and perform the ABC classification.
11.7.2 Scenario: The ABC-XYZ Analysis and its Use in Materials Management
Intended learning outcomes: Explain the combined ABC-XYZ classification. Describe its use in materials management. Identify the appropriateness of Kanban control as the result of an ABC-XYZ analysis.
11.7.3 Exercise: Safety Stock Variation versus Demand Variation
Intended learning outcomes: Find out whether the safety stock level increases with increasing demand.
11.7.4 Exercise: Determining Batch Size Depending on Stockout Costs
Intended learning outcomes: Determine the batch size in dependence of carrying costs and stockout costs, average annual consumption, and the standard deviation of demand during lead time.
11.7.5 Scenario: Effectiveness of the Order Point Technique
Intended learning outcomes: Explore the changing shape of the inventory curve for continuous and less continuous demand.
11.7 Scenarios and Exercises
Intended learning outcomes: Calculate examples for the ABC Classification. Disclose the ABC-XYZ analysis in materials management. Differentiate between safety stock variation and demand variation. Determine batch size depending on stockout costs. Assess the effectiveness of the order point technique.
