Question: Key constraints: There's a one - week delay between your customer sending an order and you receiving it . Similarly, there's a one - week
Key constraints:
There's a oneweek delay between your customer sending an order and you receiving it Similarly, there's a oneweek delay between you sending an order to your supplier and them receiving it
Inventory holding cost is per unit per week, and backorder cost is per unit per week. Backorder implies that you can't fulfil the demand due to a lack of inventory but have promised to ship it as soon as you have stock. In turn, you pay a penalty in effect, it's not a 'lost sale' but a contractual penalty for delay.
Only your customer's demand is visible to you, and only your supplier can see your demand. Your 'customer' & 'supplier' would depend on your position in the supply chain.
The demand from the 'end customer' stays flat and jumps updown at times. Unfortunately, you don't know what the future holds :
You aim to keep your cost in control and contribute to keeping the overall supply chain cost in control.
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