ITSS 4343 EXAM 3 QUESTIONS AND
ANSWERS 2026 VERIFIED.
Safety Stock - ANS - a quantity of stock (inventory) held to satisfy unexpectedly high
requirements in the stocking-up period.
Reasons For Carrying Safety Stock - ANS -Uncertainty in demand due to forecast inaccuracy
-Uncertainty in replenishment due to unreliable suppliers (in-house or external).
-should be used WITH CAUTION AS THEY CAN CAUSE UNINTENDED NEGATIVE CONSEQUENCES
WITH EXCESS INVENTORY AND LONG CYCLE TIMES.
Two Major Decisions With Safety Stock - ANS -Where should the safety stock be held in the
supply chain?
-How much safety stock to carry?
Where To Locate SS In The Supply Chain - ANS -Push - that is, push the inventory in
anticipation of actual demand. Retailers use Push.
-Pull - wait until you know the demand then push the inventory to the customer. Defense
manufacturers use Pull.
-Push/Pull - Push the inventory to a point in the supply chain in anticipation of demand then
wait until the customer orders to pull it to the customer. Computer manufactures use Push/Pull.
@2026/2027 ALLRIGHTS RESERVED.
,**Safety Stock should be held at the point in the supply chain where the customer "pulls". This
is sometimes referred to as the push/pull boundary.
How Much Safety Stock To Carry - ANS -The desired Service Level (SL). The higher the service
level the greater the safety stock.
-The accuracy of forecast. The less accurate the forecast the greater the safety stock.
-The replenishment lead time (RLT). The longer the replenishment lead time the greater the
safety stock.
Locating Safety Stock In The Supply Chain - ANS -may occur at any point in the supply chain.
That is, retailer, distributor, manufacturer, etc.
-The push-pull boundary point in the supply chain represents that point where customers make
their choices and final demand decisions.
Specifying Safety Stock in SAP - ANS **SAP ERP allows safety stock to be specified in three
different ways.
-Absolute Safety Stock. Ex - always carry an extra 10 units to cover uncertainties.
-Safety Days' supply - Ex - the supply should arrive 3 days earlier than actually needed.
-Automatic calculation of safety stock (later in this lesson).
*A planner should NEVER USED ALL TYPES FOR THE SAME MATERIAL.
*Absolute safety stock will display as a demand (required qty) in the Stock Requirements List
(MD04
Consumption Based Planning (CBP) - ANS -a generic term for the procedure within Material
Requirements Planning (MRP) for which replenishment planning is based upon the consumption
of inventory.
Manual Re-Order Point - ANS following conditions must exist:
@2026/2027 ALLRIGHTS RESERVED.
, -Demand is relatively constant and we have a good historical data.
-Replenishment lead times are predictable and we have a good historical data.
**Every time a material is withdrawn from the warehouse, the system checks whether this
withdrawal has caused stock levels to fall below the reorder point.
-If this is the case, the system makes an entry in the planning file for the next planning run.
-A planning file entry will cause MRP to create a new procurement proposal (Request for
Requisition) for the material.
Net Requirement Calculation - ANS If (current stock + future stock) < Reorder point
Then replenishment will occur
Automatic Re-Order Point Planning - ANS -SAP will automatically calculate the two important
parameters:
-Re-order level (i.e. re-order point)
-Safety stock
-Both parameters are calculated as part of a forecast run.
-The re-order point calculation will depend on the forecast during the replenishment lead time.
-The safety stock calculation will depend on the service level and the forecast accuracy (MAD)
calculated in the forecast run.
MRP Outputs - ANS -MRP program can be run as a background job at regularly scheduled
intervals or at any time.
qWhen executed, the program can be run for a various scope such as plants, or storage
locations (MRP Areas).
@2026/2027 ALLRIGHTS RESERVED.
ANSWERS 2026 VERIFIED.
Safety Stock - ANS - a quantity of stock (inventory) held to satisfy unexpectedly high
requirements in the stocking-up period.
Reasons For Carrying Safety Stock - ANS -Uncertainty in demand due to forecast inaccuracy
-Uncertainty in replenishment due to unreliable suppliers (in-house or external).
-should be used WITH CAUTION AS THEY CAN CAUSE UNINTENDED NEGATIVE CONSEQUENCES
WITH EXCESS INVENTORY AND LONG CYCLE TIMES.
Two Major Decisions With Safety Stock - ANS -Where should the safety stock be held in the
supply chain?
-How much safety stock to carry?
Where To Locate SS In The Supply Chain - ANS -Push - that is, push the inventory in
anticipation of actual demand. Retailers use Push.
-Pull - wait until you know the demand then push the inventory to the customer. Defense
manufacturers use Pull.
-Push/Pull - Push the inventory to a point in the supply chain in anticipation of demand then
wait until the customer orders to pull it to the customer. Computer manufactures use Push/Pull.
@2026/2027 ALLRIGHTS RESERVED.
,**Safety Stock should be held at the point in the supply chain where the customer "pulls". This
is sometimes referred to as the push/pull boundary.
How Much Safety Stock To Carry - ANS -The desired Service Level (SL). The higher the service
level the greater the safety stock.
-The accuracy of forecast. The less accurate the forecast the greater the safety stock.
-The replenishment lead time (RLT). The longer the replenishment lead time the greater the
safety stock.
Locating Safety Stock In The Supply Chain - ANS -may occur at any point in the supply chain.
That is, retailer, distributor, manufacturer, etc.
-The push-pull boundary point in the supply chain represents that point where customers make
their choices and final demand decisions.
Specifying Safety Stock in SAP - ANS **SAP ERP allows safety stock to be specified in three
different ways.
-Absolute Safety Stock. Ex - always carry an extra 10 units to cover uncertainties.
-Safety Days' supply - Ex - the supply should arrive 3 days earlier than actually needed.
-Automatic calculation of safety stock (later in this lesson).
*A planner should NEVER USED ALL TYPES FOR THE SAME MATERIAL.
*Absolute safety stock will display as a demand (required qty) in the Stock Requirements List
(MD04
Consumption Based Planning (CBP) - ANS -a generic term for the procedure within Material
Requirements Planning (MRP) for which replenishment planning is based upon the consumption
of inventory.
Manual Re-Order Point - ANS following conditions must exist:
@2026/2027 ALLRIGHTS RESERVED.
, -Demand is relatively constant and we have a good historical data.
-Replenishment lead times are predictable and we have a good historical data.
**Every time a material is withdrawn from the warehouse, the system checks whether this
withdrawal has caused stock levels to fall below the reorder point.
-If this is the case, the system makes an entry in the planning file for the next planning run.
-A planning file entry will cause MRP to create a new procurement proposal (Request for
Requisition) for the material.
Net Requirement Calculation - ANS If (current stock + future stock) < Reorder point
Then replenishment will occur
Automatic Re-Order Point Planning - ANS -SAP will automatically calculate the two important
parameters:
-Re-order level (i.e. re-order point)
-Safety stock
-Both parameters are calculated as part of a forecast run.
-The re-order point calculation will depend on the forecast during the replenishment lead time.
-The safety stock calculation will depend on the service level and the forecast accuracy (MAD)
calculated in the forecast run.
MRP Outputs - ANS -MRP program can be run as a background job at regularly scheduled
intervals or at any time.
qWhen executed, the program can be run for a various scope such as plants, or storage
locations (MRP Areas).
@2026/2027 ALLRIGHTS RESERVED.
