BU435 Chapter Notes - Chapter 13: Product Differentiation
Document Summary
Ch. 13: determining the optimal level of product availability. Importance of the level of product availability: product availability measured by cycle service level or fill rate, also referred to as the customer service level, product availability affects supply chain responsiveness, trade-off: High levels of product availability increased responsiveness and higher revenues. High levels of product availability increased inventory levels and higher supply chain costs: product availability is related to profit objectives and strategic and competitive issues. Factors affecting the optimal level of product availability: cost of overstocking, co=s-c ; cost of under stocking, cu=p-c, possible scenarios. Seasonal items with a single order in a season. One-time orders in the presence of quantity discounts. Managerial levers to improve supply chain profitability: obvious actions, increase salvage value of each unit (higher availability, selling to outlet stores, decrease the margin lost from a stock out (higher profit by lower availability) Over and under stocking are reduced: improved forecasting.
