ISM INTE Exam - Topic 5 Question 30 Discussion

Actual exam question for ISM's INTE exam

Question #: 30
Topic #: 5

A firm sells an average of 2,000 units of snacks from its existing stock while it waits for orders to be delivered. Demand during lead time varies in accordance with a normal distribution. The firm's supply manager prepares a presentation to explain the concept of customer service and safety stock levels using the following figure:

What does the shaded area D (in red) represent?

AAverage demand during lead-time

BService level

CStock-out risk

DRe-order point

Show Suggested Answer

Suggested Answer: C

The shaded area D represents the probability of running out of stock during lead time, indicating the level of risk if safety stock is insufficient. Proper safety stock levels are crucial to minimize stock-outs and ensure service reliability. Reference: Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation.

by Craig at Aug 02, 2025, 03:31 PM

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Latosha

5 months ago

Service level sounds right to me!

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Francine

5 months ago

Wait, are we sure about this? Seems a bit confusing.

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Lon

5 months ago

I thought it was average demand during lead-time.

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Jesus

5 months ago

Definitely not! It's about stock-out risk, I think.

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Almeta

5 months ago

I'm pretty sure D is the re-order point.

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Johnathon

6 months ago

I’m leaning towards service level for the shaded area, but I could see how it might also indicate stock-out risk. This is tricky!

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Rodolfo

6 months ago

I feel like D could be the re-order point, but I need to double-check how that relates to the normal distribution curve.

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Reta

7 months ago

I remember practicing a similar question where we discussed average demand during lead time. That might be what D represents here.

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Dierdre

7 months ago

I think the shaded area D represents the stock-out risk, but I'm not entirely sure. It could also relate to service levels.

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Rolande

7 months ago

This is a straightforward inventory management question. The shaded area represents the re-order point, which is the level of inventory that triggers a new order to be placed. I'm confident in this answer.

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Ceola

7 months ago

I'm a bit confused by the terminology here. Is the "service level" the same as the customer service level? And how does that relate to the shaded area? I'll need to think this through carefully.

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Bette

7 months ago

Okay, I think I've got this. The shaded area must represent the stock-out risk, which is the probability of running out of inventory during the lead time. I'll select that option and move on.

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Rickie

8 months ago

Hmm, the question is asking about the shaded area, but I'm not sure exactly what it's referring to. I'll need to review the concepts of customer service, safety stock, and lead time to figure this out.

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Bernardo

8 months ago

This looks like a standard inventory management question. I'll need to carefully analyze the graph and the options to determine what the shaded area represents.

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