Podcast
Questions and Answers
Postponement of product differentiation until closer to the sale results in a better match of supply and demand.
Postponement of product differentiation until closer to the sale results in a better match of supply and demand.
True (A)
What is a key benefit of postponement in a seasonal supply chain?
What is a key benefit of postponement in a seasonal supply chain?
- Better matching of supply and demand (correct)
- Reduced production costs
- Higher raw material availability
- Increased demand for products
Why is tailored postponement beneficial for businesses?
Why is tailored postponement beneficial for businesses?
Tailored postponement allows businesses to increase profits by postponing differentiation only for products with uncertain demand, leading to a better match of supply and demand.
What are the two main factors that influence the desired level of product availability?
What are the two main factors that influence the desired level of product availability?
In a seasonal supply chain, activities prior to product differentiation require ______ forecasts than individual product forecasts.
In a seasonal supply chain, activities prior to product differentiation require ______ forecasts than individual product forecasts.
A higher level of product availability generally leads to lower inventory levels and lower supply chain costs.
A higher level of product availability generally leads to lower inventory levels and lower supply chain costs.
Match the following concepts with their descriptions:
Match the following concepts with their descriptions:
What is the term used to describe the ability to quickly replenish products and ensure a smooth flow of goods through the supply chain?
What is the term used to describe the ability to quickly replenish products and ensure a smooth flow of goods through the supply chain?
The cost of holding excess inventory is known as the ______ cost.
The cost of holding excess inventory is known as the ______ cost.
Match the following scenarios with their corresponding stockout consequences:
Match the following scenarios with their corresponding stockout consequences:
Flashcards
Postponement
Postponement
Delay of product differentiation until closer to sale.
Aggregate Forecasts
Aggregate Forecasts
Predictions for overall demand before product differentiation.
Individual Product Forecasts
Individual Product Forecasts
Predictions needed close to the sale for specific products.
Supply and Demand Matching
Supply and Demand Matching
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Tailored Postponement
Tailored Postponement
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Product Availability
Product Availability
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Cycle Service Level
Cycle Service Level
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Trade-off in Product Availability
Trade-off in Product Availability
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Cost of Overstocking (Co)
Cost of Overstocking (Co)
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Cost of Understocking (Cu)
Cost of Understocking (Cu)
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Managerial Levers for Profitability
Managerial Levers for Profitability
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Improved Forecasts
Improved Forecasts
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Quick Response
Quick Response
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Study Notes
Product Availability and Profit
- Product availability (measured by cycle service level or fill rate) impacts supply chain responsiveness.
- High availability means increased responsiveness and higher revenue, but also higher inventory costs.
- Product availability is linked to profit goals, strategic decisions, and competitive factors.
Factors Affecting Desired Availability
- Cost of overstocking (Co): Costs associated with excess inventory.
- Cost of understocking (Cu): Costs associated with stockouts.
- Scenarios:
- Seasonal items with a single order.
- One-time orders with quantity discounts.
- Continuously stocked items.
- Demand backlogged during stockouts.
- Demand lost during stockouts.
Improving Supply Chain Profitability
- Increase salvage value: Sell excess inventory to outlets.
- Decrease stockout margin loss: Implement backup sourcing or substitute products.
- Reduce demand uncertainty: Improve demand forecasting.
Improved Forecasting
- Improved forecasts reduce uncertainty.
- Reduced uncertainty leads to:
- Lower safety stock levels (and costs) at the same product availability.
- Higher product availability with the same safety inventory.
- Both lower safety stock and higher availability.
Value of Speed in Seasonal Supply Chains
- Quick response reduces replenishment lead time.
- Reduced lead time improves forecast accuracy.
- Benefits:
- Lower order quantities, less inventory with same availability.
- Reduced overstocking.
- Higher profits.
Value of Postponement in Seasonal Supply Chains
- Delay product differentiation until closer to sale.
- Aggregate forecasts before product differentiation needed.
- Individual product forecasts closer to sale.
- Better supply/demand matching.
- Beneficial for online sales.
- Increased profits by matching supply with demand.
Tailored Postponement Impact
- Use postponement for a portion of demand, other products without.
- Example: Produce certain sweaters without postponement, others with.
- Tailored postponement increases profit by postponing differentiation for uncertain items.
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Description
This quiz explores the relationship between product availability and supply chain profitability. It covers key factors such as overstocking and understocking costs, as well as strategies to improve responsiveness and revenue. Test your knowledge on how these elements affect strategic decisions in supply chain management.
