1. Consider different approaches for managing inventory listed. Give an example of a real-world company or product that uses each of the approaches.

Managing Inventory When managing inventory to meet predictable variability, firms use a combination of the follow- ing approaches: Using common components across multiple products: In this approach, a firm designs common components to be used in multiple products. The total demand of these com- ponents is relatively stable, even though each product displays predictable variability. The use of a common engine for both lawn mowers and snowblowers allows for engine demand to be relatively stable even though lawn mower and snowblower demand fluctuates over the year. Therefore, the part of the supply chain that produces components can easily synchronize supply with demand, and a relatively low inventory of parts has to be built up. Similarly, in a consult- ing firm, many of the same consultants produce growth strategies when they are in demand and cost-reduction strategies when these are in demand. Build inventory of high-demand or predictable-demand products: When most of the products a firm produces have the same peak demand season, the previous approach is not feasible. In such an environment, it is best for the firm to build products that have more pre- dictable demand during the off-season, because there is less to be learned about their demand by waiting. Production of more uncertain items should take place closer to the selling season, when demand is more predictable. Consider a manufacturer of winter jackets that produces jackets both for retail sale and for the Boston Police and Fire Departments. Demand for the Boston Police and Fire jackets is more predictable, and these jackets can be made in the off-season and stocked up until winter. The retail jacket's demand, however, will likely be better known closer to the time when it is sold, because fashion trends can change quickly. Therefore, the manufacturer should produce the retail jackets close to the peak season, when demand is easier to predict. This strategy helps the supply chain synchronize supply and demand better