Explanation
Risk pooling is a strategy to reduce the total safety stock by aggregating the inventory of multiple items or locations. Risk pooling works best for items with high demand uncertainty and long lead times, because these items have higher variability and require more safety stock. By pooling the inventory, the variability of the total demand is reduced, and the safety stock can be lowered without increasing the risk of stockouts. References: CPIM Part 2 Exam Content Manual, Domain 5: Plan and Manage Inventory, Section
5.3: Inventory Management Policies and Objectives, p. 28.