A company distributes products through a multitiered distribution network. Recently there has been high demand variability for a mature product that had experienced stable demand for several years. The most appropriate way to address the variability of demand is to:
The most appropriate way to address the variability of demand in a multitiered distribution network is to increase demand visibility with all partners. This means sharing demand information and forecasts across the network, which improves coordination, planning, and responsiveness. With better visibility, all partners can adjust their actions quickly to changes in demand patterns, leading to more accurate inventory management and customer service. Increasing manufacturing throughput or safety stock targets might address symptoms but does not tackle the root cause of variability in demand.
The correct answer should be D. Manufacturing throughput has nothing to do with demand variability. Sharing demand information can help speed up more accurate decision making to help reduce variability throughout the chain
Concur that answer is D. B, increasing safety stocks is based on the premise that demand keeps going upward, while here it says "variability", meaning that demand could go downward. So increasing safety stock levels might lead to extra handling/carrying costs.
Increasing demand visibility involves sharing demand information and forecasts with all partners in the distribution network. This allows for better coordination, planning, and responsiveness to changes in demand patterns.
In a multitiered distribution network, demand variability can create challenges in managing inventory levels and meeting customer service levels. When there is high demand variability for a mature product that had experienced stable demand for several years, increasing distribution safety stock targets can be an appropriate way to address the variability of demand. Manufacturing throughput is tackling the challenge at the wrong point in the supply chain.