Determining the Optimal Level of Product Availability - Factors Affecting Optimal Level of Product Availability
7 important questions on Determining the Optimal Level of Product Availability - Factors Affecting Optimal Level of Product Availability
Give 2 obvious managerial levers to increase profitability
- Increasing the salvage value of each unit increases profitability
- Decreasing the margin lost from a stockout increases profitability (by allowing a lower optimal cycle service level)
In which four ways can a manager reduce demand uncertainty?
- Improved forecasting
- Quick response
- Postponement
- Tailored sourcing, use a supplier with a short lead time
Give 3 important consequences of being able to place a second replenishment order in the season after observing some sales
- The expected total quantity ordered during the season with two orders is less than that with a single order for the same cycle service level.
- The average overstock to be disposed of at the end of the sales season and the expected understock is less if a follow-up order is allowed
- The profits are higher when a follow-up order is allowed during the sales season
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When a firm uses tailored postponement, what does it mean?
When a firm uses tailored sourcing, what does it mean?
What is volume-based tailoring?
What is product-based tailored sourcing?
high-volume products with less demand uncertainty are obtained from an efficient source
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