SCM 411 Quiz 12 2023 with verified questions and answers

A SC that needs to achieve a balance between the level of availability and the cost of inventory that maximizes SC profitability The loss incurred by a firm for each unsold unit at the end of the selling season is the cost of overstocking the product The margin lost from current as well as future sales if the customer does not return should be included in the cost of understocking the product The costs of overstocking and understocking have a direct impact on both the optimal cycle service level and profitability Which of the following would be a strategy to decrease the margin lost in a stockout? Arranging for backup sourcing A company that uses a more expensive short lead time supplier as a backup for a low cost, long lead time supplier is using tailored sourcing Quick response is clearly advantageous to a retailer in the SC As the number of order cycles per season increases the leftover inventory decreases, but at a decreasing marginal rate As the total quantity for the season is broken up into multiple smaller orders, the buyer is better able to match supply and demand and increase profitabilty If quick response allows multiple orders in the season profits increase and the overstock quantity decreases There is a cost associated with postponement because the production cost using postponement is typically higher than the production cost without it Postponement is valuable for a firm that sells a large variety of products with demand that is independent and comparable in size The value of postponement decreases as uncertainty decreases or demand is positively correlated among end products ______ may reduce overall profits for a firm if a single product contributes the majority of the demand Postponement When setting optimal levels of product availability in practice, it is important to obtain a reasonable estimate of the cost of stocking out