APICS Certified Supply Chain Professional (CSCP) — Question 409

Which of the following factors is the key determinant of safety stock for finished goods?

Answer options

• A. Forecast variance
• B. Mean absolute deviation (MAD)
• C. Standard deviation
• D. Desired service level

Correct answer: D

Explanation

The desired service level is crucial because it directly impacts the amount of safety stock required to meet customer demand without stockouts. While forecast variance, mean absolute deviation, and standard deviation are related to demand variability, they do not alone determine the safety stock level as effectively as the desired service level does.