APICS Certified Supply Chain Professional (CSCP) — Question 106

When multiple warehouses are combined into one centralized warehouse, the requirement for safety stock is reduced because:

Answer options

• A. there is less in-transit inventory.
• B. the total variability of demand is reduced.
• C. average cycle stock is reduced.
• D. safety stock becomes available-to-promise.

Correct answer: B

Explanation

The correct answer is B because centralizing warehouses leads to a reduction in the total variability of demand across the system, which lowers the need for safety stock. Options A, C, and D do not directly address the relationship between safety stock and demand variability; thus, they are incorrect in this context.