Chapter 13 - Determining the Optimal Level of Product Availability

Demonstrate the Supply Chain Management Strategies and Transportation in Supply Chain
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Demonstrate the Supply Chain Management Strategies and Transportation in Supply Chain
Chapter 13 - Answer 1
The active management of and supply is crucial for smooth operations of any business. For instance, Walmart implemented a safety inventory technique to increase the level of availability of inventory and decrease the stocking probability (Jawad, 2017). In the same manner, different ways can be used to reduce the demand uncertainty and maintain supply chain performance. There are two basic determinants that may cause uncertainty. Firstly, the uncertainty of supply or demand can flux the positivity of the supply chain and second is the desired level of product availability.
Managerial levers to reduce the demand uncertainty can be implemented along with the safety inventory technique at the warehouses. The managerial lever is composed of seven components namely; “strategy, structure, leadership, people, information and decision process, culture and reward” (Paulraj, Chen, & Blome, 2017). Along with with managerial lever the replenishment of lead time and variability of lead time (Sunil, & Peter, 2013). Improve forecasting with market intelligence and collaboration to reduce demand uncertainty. In detail the following steps can be followed as a part of managerial levers to be implied by supply-chain manager for reducing the uncertainty of demand;
* Improve Forecasting: Employee market intelligence and collaboration.
* Quick Response: Reduce replenishment lead-time so that multiple order placement can be entertained
* Postponement: Postpone production differentiation unless the point of sale is close at the time of multiple order placement
* Tailored Sourcing: Appoint suppliers who have short lead-time irrespective of higher cost. The supplier with lower cost but long lead-time is destructive for business.
Chapter 13 - Answer 2
The rate of service is determined by the amount of customer's demand for inventory. At this stage, the product availability is assumed by levels of cycle service. The level of product availability is dependent on the performance of the supply chain (Sunil, & Peter, 2013). The higher the rate of product availability will be the higher the costs of the supply chain will be indulged. Therefore, the balance of inventory available and the cost of inventory has to be maintained for effective supply chain operations. Different factors influence the equilibrium of the inventory available and the cost of inventory (Paulraj et al., 2017)
For example, a large company sells ski Jackets. The active time of sale of the company's product is from the month of November to the month of February. Therefore, before the active months begin the manufacturer acquires the supplies for the entire season (Sunil, & Peter, 2013). at this point, the manner at the company has to mitigate the loss from unsold jackets as well as the loss from the customer at the time of the unavailability of the product in the store. The cost of overstocking is equal to the cost of loss per the unsold unit. Simultaneously, the cost of understocking is equal to...