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Decisions on Inventory

Cycle inventory: Average amount of inventory used to satisfydemand between shipments

Cost of one time bulk order vs cost of multiple small orders

Safety inventory: Inventory held in case demand exceeds

expectationsCost of carrying too much inventory versus cost of losing sales

Seasonal inventory: Inventory built up to counter predictable

variability in demand

Cost of carrying additional inventory versus cost of flexible

production

Overall trade-off: Responsiveness versus efficiency

More inventory: greater responsiveness but greater cost

Less inventory: lower cost but lower responsiveness

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How Transportation Affects Supply

Chain

Responsible for moving the product betweendifferent stages in the supply chain

Decides the responsiveness and efficiency of the

system

Greater responsiveness is achieved by using

faster transportation modes .

Greater efficiency is achieved by minimising

associated cost.Also has its impact on facilities and inventory.

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Decisions on Transportation

Choice of transportation mode

air, truck, rail, ship, pipeline, electronic

transportation

difference in cost, speed, size of shipment,flexibility

Design of transportation network

Route i.e. path along which a product is

shipped

Network i.e. collection of locations and routes

Overall trade-off is between

responsiveness and efficiency

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Components of Information

Decisions Push (MRP) versus pull (demand

information transmitted quicklythroughout the supply chain)

Coordination and information sharing

Forecasting and aggregate planning

Enabling technologies EDI

Internet ERP systems

Supply Chain Management software