A graphical device used to evaluate supply chain decisions under uncertainty (e.g., shifting exchange rates or demand fluctuations) over time. Part 3: Planning and Coordinating Demand and Supply Chapter 7: Demand Forecasting in a Supply Chain Forecasting forms the basis of all planning decisions.
Step 1: Understanding the Customer and Supply Chain Uncertainty
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Competitive Strategy ◄───(Alignment)───► Supply Chain Strategy A graphical device used to evaluate supply chain
Centralized facilities increase efficiency (economies of scale) but reduce responsiveness (longer distance to customers).
The total cost incurred across all stages to fulfill the request (production, inventory, transportation, administration).
Chopra categorizes supply chain decisions into three distinct phases based on time horizons: Safety inventory is held to satisfy demand that
High-value capacity or inventory that spoils or devalues over time (e.g., airline seats, fashion apparel) benefits significantly from dynamic pricing.
Safety inventory is held to satisfy demand that exceeds the amount forecasted for a given period. It protects against stockouts caused by demand volatility and lead-time delays. SS=z×σLcap S cap S equals z cross sigma sub cap L
Flexibility of manufacturing tech and production economies of scale. very long lead times.
: Uses a consistent framework to guide users through key performance drivers: facilities, inventory, transportation, information, sourcing, and pricing.
Lowest cost for international bulk trade; very long lead times.