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CHAPTER THREE
Discussion Questions

1. How could a grocery store use inventory to increase the responsiveness of the company’s supply chain?

The logistical driver of inventory encompasses all raw materials, work in process, and finished goods within a supply chain. A grocery store can be more responsive in the eyes of its customers if it offers a broader variety of SKUs and/or maintains a greater quantity of each SKU. A greater quantity of each SKU is problematic for highly perishable items like produce, meat, fish, etc. For these items, a grocery store supply chain should be set up to permit frequent orders so that freshness is ensured and a stockout situation won’t exist for a significant length of time. A grocery store supply chain should use historical demand patterns for seasonal items to relieve stress on all members and provide customers with product during peak demand periods.

2. How could an auto manufacturer use transportation to increase the efficiency of its supply chain?

Transportation, a logistical driver, entails moving inventory from point to point in the supply chain. The trade-off in transportation is between the cost of transportation and the speed at which product is transported. Slower modes of transportation reduce cost, but could be a reasonable approach if suppliers are co-located with the assembly operations. If the supply chain is designed in such a way, and assembly operations are located with proximity to markets, then the supply chain can be run cheaply without holding too much inventory in transit.

3. How could a bicycle manufacturer increase responsiveness through its facilities?

Facilities, another logistical driver, are the actual physical locations in the supply chain network where product is stored, assembled, or fabricated. A facility that is designed to be flexible can respond quickly to market demands by retooling to produce different models or products, whereas a...
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