Libbey Manufacturing makes glassware, including cups, bottles and vases. The com

Question

Libbey Manufacturing makes glassware, including cups, bottles and vases. The company has suffered a supply shortage of glass,
and is unable to fully satisfy customer orders. In hopes of not losing business, Libbey will ration its supply amongst customers based
on past order size. In the past, the company noticed that whenever this happens, customers place large orders upfront that they
cancel later, and Libbey is stuck with high inventory levels in the end. How can Libbey better protect itself from this cause of the
bullwhip effect?
Ration supply based on past sales data instead of past ordering data
Replace relaxed customer return policies with stricter policies
Implement better inventory management technology
Both a & b
Both a & c

Explanation / Answer

Answer is -

Both a & b

By rationing the supply based on past sales data which is the actual sales rather than just based on past ordering data which might have been cancelled at a later stage, the firm can manage the inventory better.

Also, the firm needs to implement strict customer return policies in terms of demanding advance which is not refunded later etc., to ensure the customers avoid ordering just for reserving the stock.

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