EXPERIENTIAL LEARNING 9.1 Swift Electronic Supply, Inc. headed to the beaches to have fun. About 40 miles away, however, Steven Holland, the CEO of Swift Electronic Supply, Inc., faced a severe problem with Switt's inventory management. An Intel veteran, Steven Holland worked in the electronic components distribution industry for more than 20 years. Seven years ago, he founded Swift Electronic Supply, Inc., an electronic distributor. After several successful years, the company is now troubled with eroding profit margins. Recent economic downtums further worsened the situation. Factors such as the growth of B2B e-commerce, the globaization of markets, the increased electronic distributors affect the future of Swift. To reverse these influences, Holland talked to a prestigious local university. After consultation, Holland found the most effective way to increase profitability is to cut inventory costs. As a starting point, he studied in detail a representative product, dynamic random-access memory (DRAM), as the basis for his plan. Industry and Company Preview Owing to a boom in the telecommunications industry and the information technology revolution, electronics distributors experienced double-digit annual growth over the past decade. To cut the cost of direct purchasing forces, large component manufacturers such as Intel, Cisco, and Texas Instruments decided to outsource their procurement so that they oould focus on product development and manufacturing. Therefore, independent electronic distributors like Swift started offering procurement services to these companies. Swift serves component manufacturers in Califomia and Arizona. Working as the intermediary between its customers and overseas original equipment manufacturers (OEMs), Swift's business model is quite simple. Forecasting customer demand, Swit places orders to a number of OEMS, to its end customers. Recently, due to more intense competition and declines in demand, Swift offered more flexible delivery schedules and was willing to accommodate small order quantities. However, customers can always shift to Swift's competitors should Switt not fulfill their orders. Steven Holland was in a dilemma: The intangible costs of losing customers can be enormous; how- TABLE 9.4 EXAMPLE SIMULATION