Author Question: Discuss inventory positioning, and the differences between centralized and decentralized ... (Read 80 times)

Shelles

  • Hero Member
  • *****
  • Posts: 582
Discuss inventory positioning, and the differences between centralized and decentralized inventory.

Question 2

Which survey method offers the least geographic flexibility?
 a. telephone interview
  b. door-to-door personal interview
  c. Internet survey
  d. mail survey



Pariscourtney

  • Sr. Member
  • ****
  • Posts: 352
Answer to Question 1

Inventory positioning focuses on the issue of where inventory is located within the supply chain. One strategy is to hold a centralized stock of inventory at a single location such as the origin point or some other advantageous location in the supply chain. Product is distributed to customers across the network from this central stocking point. The benefit of this consolidation strategy is greater control over the inventory and reduced demand variability due to risk pooling. The central or national inventory pool supports higher in-stock availability, though there is a need for less safety stock.

The drawback of centralized inventory is the long distance to customers, which typically extends lead times and results in higher transportation costs. Despite these drawbacks, manufacturers of high-value, low-weight products such as prescription pharmaceuticals often rely on one strategically placed inventory pool. The transportation costs associated with next-day and second-day order delivery are offset by the reductions in inventory carrying costs, the enhanced visibility of product flows, and the improved control over order-filling processes, product pedigree issues, and recall events.

The alternate inventory positioning strategy is to hold product in multiple customer- facing positions. Stocking inventory regionally or locally helps to reduce customer delivery costs and order cycle time. Product is positioned closer to demand points and can be readily dispatched to meet customer requirements. This decentralized inventory strategy works well for high-volume, low-cost products with low demand uncertainty such as laundry detergent, pet food, and cereal.

The decentralized inventory strategy is not without challenges. First, more facilities are required to stock the product, leading to higher handling costs, the risk of product damage, and the potential for product pilferage, not to mention the additional expenses of running the facilities. Also, average inventory levels will rise as each facility will have to hold safety stock to cover demand variation within the region. To combat these issues, some organizations have shifted toward more centralized distribution systems with fewer stocking points. Which inventory positioning strategy is best? There is no single answer, and many organizations use both strategies.

Answer to Question 2

B



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Many supplement containers do not even contain what their labels say. There are many documented reports of products containing much less, or more, that what is listed on their labels. They may also contain undisclosed prescription drugs and even contaminants.

Did you know?

Cancer has been around as long as humankind, but only in the second half of the twentieth century did the number of cancer cases explode.

Did you know?

Dogs have been used in studies to detect various cancers in human subjects. They have been trained to sniff breath samples from humans that were collected by having them breathe into special tubes. These people included 55 lung cancer patients, 31 breast cancer patients, and 83 cancer-free patients. The dogs detected 54 of the 55 lung cancer patients as having cancer, detected 28 of the 31 breast cancer patients, and gave only three false-positive results (detecting cancer in people who didn't have it).

Did you know?

Aspirin is the most widely used drug in the world. It has even been recognized as such by the Guinness Book of World Records.

Did you know?

The top 10 most important tips that will help you grow old gracefully include (1) quit smoking, (2) keep your weight down, (3) take supplements, (4) skip a meal each day or fast 1 day per week, (5) get a pet, (6) get medical help for chronic pain, (7) walk regularly, (8) reduce arguments, (9) put live plants in your living space, and (10) do some weight training.

For a complete list of videos, visit our video library