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Question 256 - CSCP discussion

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A company would like to benchmark its inventory levels against other companies. Which of the following metrics is best to use for this purpose?

A.
Fill rate
Answers
A.
Fill rate
B.
Days of supply
Answers
B.
Days of supply
C.
Net asset turns
Answers
C.
Net asset turns
D.
Cash-to-cash cycle time
Answers
D.
Cash-to-cash cycle time
Suggested answer: B

Explanation:

Days of supply is a metric that measures how long current inventory levels will last given the average daily usage or sales rate. It provides a standard way to compare inventory levels across companies, industries, or time periods. This metric is useful for benchmarking because it directly relates inventory levels to actual usage rates, making it a more precise measure of inventory efficiency than other metrics like fill rate or net asset turns.

Vollmann, T.E., Berry, W.L., Whybark, D.C., & Jacobs, F.R. (2005). Manufacturing Planning and Control for Supply Chain Management. McGraw-Hill.

Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation. Pearson.

asked 16/09/2024
Paolo D Amelio
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