Certified Supply Chain Professional (CSCP) Practice Exam

Which factor is NOT considered when setting inventory policy?

1. Customer demand

2. Planning horizon

3. Supplier credit rating

4. Product variation

The correct answer is: Supplier credit rating

Setting an inventory policy is critical for ensuring that a supply chain operates smoothly and efficiently. Factors such as customer demand, planning horizon, and product variation are all integral to the inventory management process because they directly influence how much inventory should be maintained. Customer demand is fundamental in determining inventory levels because it dictates the quantity and timing of stock needed to meet consumer needs without overstocking. The planning horizon is another key factor that affects inventory policy. It refers to the period into the future for which inventory decisions are made. A longer planning horizon can lead to different inventory strategies compared to a shorter one, especially in terms of forecasting and adjusting stock levels based on anticipated demand. Product variation impacts inventory policy as well. Different products may have varying rates of demand, lead times, and shelf lives, which necessitates tailored inventory strategies for each product line to optimize stock levels. While the credit rating of a supplier can be important in evaluating overall supplier reliability and risk management, it does not directly influence how inventory levels are set. It is more related to supplier relationships and financial terms rather than the mechanics of inventory control. Therefore, it is not a primary consideration when developing an inventory policy.