Management Information System - Dell

1. Describe the “Direct Business Model.”
A direct business model is one in which a company bypasses the dealers in the supply chain and supply directly to the customers. The company following a direct business model treats suppliers and service providers as if they are inside the company.
Dell uses this Direct Business Model very efficiently. It buy passes the dealers in the supply chain building each to order. It uses technology to blur the traditional boundaries between users, suppliers, manufacturers. This model is named virtual Integration.

2. How does it differ from traditional business models – e.g. Vertical Integration?

Vertical Integration deals with the development of all the research, development, manufacturing, and distribution capabilities in-house. Dell treats suppliers and service providers as if they were inside the company. The difference in the levels of integration is quite evident in the Dell’s business model.

3. What are the advantages of direct business model from vertical integration?
Some of the major Advantages of a direct business model over vertical integration are:
Eliminate risks and cost of carrying large finished good inventory
High velocity(very less time spent by the product in inventory)
Direct customer relationship
Build-to order
Just-in-time manufacturing – high velocity and reduced channel cost
4. How is inventory value measured?
The accounting method that a company decides to use to determine the costs of inventory can directly impact the balance sheet, income statement and statement of cash flow. There are three inventory-costing methods that are widely used by both public and private companies:

First-In, First-Out (FIFO) this method assumes that the first unit making its way into inventory is the first sold. For example, let's say that a bakery produces 200 loaves of bread on Monday at a cost of $1 each, and 200 more on Tuesday at