SCM 404 Demand Fulfillment
SCM 404 Demand Fulfillment
Spring 2014
1. Implied Demand Uncertainty (IDU) has important implications for the structure and performance of a supply chain. Consider the table below from class on 1/9/13. For each customer characteristic or need, explain the meaning of the “+” or “-“ and explain why that characteristic has that effect. (3 points)
Customer Need
Impact on IDU
Quantity of individual order
+
Response time (customer desired lead time)
-
Variety of products
+
Service level (product availability)
+
Desired innovation
+
Price (sensitivity to)
+
As an example for the first need above: “The quantity of the individual order will increase the variability of demand that our company (supply chain) will experience, because if we receive additional orders it implies a large increase in the quantity our customers want us to supply, or if we receive fewer orders it means a larger decrease in the quantity our customers want us to supply.” See pp. 22-25 of the custom text for additional information that may be helpful.
Implied demand uncertainty- demand uncertainty imposed on the supply chain because of the customer needs it seeks to satisfy
Quantity of individual order: An increase in the quantity of individual orders will cause the implied demand uncertainty to be greater since there will be more variation in customer needs among the product orders. Therefore, the demand rate is going to much more difficult to predict for several unique customer orders than if would be if less individual orders occurred.
Response time (customer desired lead time): An increase in the lead time or the amount of time given to fulfill the customer needs process will result in a decrease in the implied demand uncertainty. The supply chain will have more time respond to specific customer needs and will have the ability to manage customer accounts more efficiently resulting in a more stable demand rate.
Variety of products- The implied demand uncertainty will
Spring 2014
1. Implied Demand Uncertainty (IDU) has important implications for the structure and performance of a supply chain. Consider the table below from class on 1/9/13. For each customer characteristic or need, explain the meaning of the “+” or “-“ and explain why that characteristic has that effect. (3 points)
Customer Need
Impact on IDU
Quantity of individual order
+
Response time (customer desired lead time)
-
Variety of products
+
Service level (product availability)
+
Desired innovation
+
Price (sensitivity to)
+
As an example for the first need above: “The quantity of the individual order will increase the variability of demand that our company (supply chain) will experience, because if we receive additional orders it implies a large increase in the quantity our customers want us to supply, or if we receive fewer orders it means a larger decrease in the quantity our customers want us to supply.” See pp. 22-25 of the custom text for additional information that may be helpful.
Implied demand uncertainty- demand uncertainty imposed on the supply chain because of the customer needs it seeks to satisfy
Quantity of individual order: An increase in the quantity of individual orders will cause the implied demand uncertainty to be greater since there will be more variation in customer needs among the product orders. Therefore, the demand rate is going to much more difficult to predict for several unique customer orders than if would be if less individual orders occurred.
Response time (customer desired lead time): An increase in the lead time or the amount of time given to fulfill the customer needs process will result in a decrease in the implied demand uncertainty. The supply chain will have more time respond to specific customer needs and will have the ability to manage customer accounts more efficiently resulting in a more stable demand rate.
Variety of products- The implied demand uncertainty will