These are pretty easy questions. It won\'t take long to do. There are four tiers

Question

These are pretty easy questions. It won't take long to do.

There are four tiers of supply: retailer, wholesaler, distributor, and manufacturer. Except for the customer, who gets what is ordered (unless the retailer is stocked out), there is a 1 period lag between order and receipt of order. Each tier makes a forecast-there is a 1 period lag between forecast and order. There is a 2 period lag between receipt of order and available to ship. After the lag time, everyone must ship everything available to support an order plus any backlog caused by previous shortages. Extra inventory costs 1 point per period; backlog costs 2 points per period. For the following questions, calculations are not necessary-give qualitative answers. Assume that all information is available to all tiers of distribution, immediately upon the customer making an order at retail. Everything else remains the same-how would this information change the way you would forecast? Assume the same scenario as for question 1. Assume also that each tier makes use of this information for better forecasting. How would this change the likelihood of having too much or too little inventory at the retailer? Assume now that everyone has a perfect forecast, but the business is seasonal. Assume the peak demand is 50% greater than the average and the minimum is 50% less than average. The manufacturer has to lay off people if there is not enough work; but doesn't want to have layoffs; and can produce an amount equal to 150% of its normal capacity by spending a premium on overtime; shortage and carrying costs exist as in the original scenario. How would the manufacturer maximize profits without going below the minimum permitted production level, at which it would need to lay off workers?

Explanation / Answer

a)first of all retailer will check whether the items received is available as a stock or not.If the item is stockedout there is one period lag between receipt of order and available to ship

b)too much inventory means they have to pay extra inventory costs i.e 1 point per period and back log costs 2 point per period. too little inventory means items will be stocked out( not sufficient) then there will be one period lag between order and receipt of order.

c) manufacturers prioritise the material according to demand its received. the material which has high demands should be produced more and may allow workers to do inventory and warehouse management in a proper way so that each material should be available at right time to maintain balance between demand and supply

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