Exam 13: Determining the Optimal Level of Product Availability

In volume-based tailored sourcing,the predictable part of a product's demand is produced at a flexible facility,whereas the uncertain portion is produced at an efficient facility.

Which of the following would be a strategy to decrease the margin lost in a stockout?

________ may reduce overall profits for a firm if a single product contributes the majority of the demand.

Explain how tailored sourcing can be used to improve profitability.

Describe the approaches a manager can use to reduce demand uncertainty.

In volume-based tailored sourcing

A managerial lever to increase profitability is to increase the salvage value of each unit.

A high level of product availability requires

The costs of overstocking and understocking have a direct impact on

With reduced demand uncertainty,a supply chain manager can better match supply and demand by reducing both overstocking and understocking.

A supply chain can use a high level of product availability to improve its responsiveness and attract customers,thus increasing revenue for the supply chain.

Whether the optimal level of availability is high or low depends on where a particular company believes they can maximize profits.

________ is the set of actions a supply chain takes to reduce the replenishment lead time.

Describe the two key factors that influence the optimal level of product availability within a supply chain.

Explain the relationship between product availability and supply chain profitability.

In tailored sourcing,firms use a combination of two supply sources,

A supply chain can use a high level of product availability to

The cost of overselling is denoted by Co and is the loss incurred by a firm for each unsold unit at the end of the selling season.

In volume-based tailored sourcing

The cost of understocking is denoted by Cu and is the margin lost by a firm for each lost sale because there is no inventory on hand.