Managing Uncertainty in a Supply Chain
6 important questions on Managing Uncertainty in a Supply Chain
What is safety inventory?
Which three key questions need to be considered when planning safety inventory?
- What is the appropriate level of product availability?
- How much safety inventory is needed for the desired product availability?
- What actions can be taken to reduce safety inventory without hurting product availability?
What happens when the safety inventory is increased?
For the same safety inventory, but increase in lot size. We get an increase in fill rate but not in CSL (cycle service level)
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Which two managerial levers may be used to reduce the level of safety inventory required that does not adversely affect product availability?
- Reduce the supplier lead time L
- Reduce the underlying uncertainty of demand
What can a reduction in supply uncertainty do?
Which review replenishment policy requires more safety inventory?
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