Ace Your INTE CPSM Exam

The graph shows inventory levels being replenished back to the maximum level immediately after reaching zero, indicating near-instantaneous replenishment. This is characteristic of a system where the lead time for orders is very short or negligible, allowing the firm to maintain optimal inventory levels without significant delay. This approach minimizes stockouts and ensures a con-tinuous supply of inventory. References:

•Stevenson, W. J. (2018). Operations Management. McGraw-Hill Education.

•Silver, E. A., Pyke, D. F., & Thomas, D. J. (2016). Inventory and Production Management in Supply Chains. CRC Press.

Buying to requirements involves planning purchases based on actual needs, minimizing inventory levels. This strategy supports lean inventory practices and reduces carrying costs, aligning procurement with just-in-time principles to enhance efficiency and responsiveness in supply chain operations.

In a price-sensitive and competitive market, focusing on total cost of ownership is critical. By negotiating with suppliers to minimize inventory and logistics costs, the firm can better control expenses and remain competitive. This approach ensures proper supply chain alignment with the new market segment's demands.

Monte Carlo simulations are used to understand the impact of risk and uncertainty in prediction and forecasting models. They work by running a large number of simulations with varying input variables to produce a distribution of possible outcomes. This method allows forecasters to see a range of potential results and their probabilities, thus reducing uncertainty and increasing confi-dence in the forecast. The goal is not to provide a single correct forecast but to understand the range and likelihood of different outcomes. References:

•Thesen, A., & Travis, L. E. (2009). Simulation for Decision Making. CRC Press.

•Charnes, J. M. (2012). Financial Modeling with Crystal Ball and Excel. Wiley.