Does manufacturer-driven substitution increase overall profitability for the manufacturer by allowing some aggregation of demand, which reduces the inventory requirements for the s... Does manufacturer-driven substitution increase overall profitability for the manufacturer by allowing some aggregation of demand, which reduces the inventory requirements for the same level of availability?
Understand the Problem
The question is asking whether manufacturer-driven substitution increases overall profitability for the manufacturer by allowing some aggregation of demand, which in turn reduces the inventory requirements for the same level of availability. We need to determine if this statement is true or false.
Answer
True
True
Answer for screen readers
True
More Information
Manufacturer-driven substitution is a strategy where a manufacturer offers a similar or alternative product when the original choice is unavailable. This allows the manufacturer to meet demand and reduces the chance a customer will go to a competitor. By managing demand in this way, inventory costs can be optimized, leading to increased profitability.
Tips
Pay attention to the wording. The statement suggests manufacturer-driven substitution increases profitability. If the question was about costs or efficiency, the answer could be different.
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