Which supply chain strategy should be implemented when lead time is short and demand is known?
Which supply chain strategy should be implemented when lead time is short and demand is known?
When lead time is short and demand is known, continuous replenishment is the optimal supply chain strategy. This approach aims to continuously replenish inventory in response to known demand patterns, thus ensuring that stock levels remain sufficient without the risk of overstocking. It minimizes lead times and consistently meets customer demand, making it the most efficient strategy in this scenario.
Push inventory is the supply chain strategy that should be implemented when lead time is short and demand is known. In this strategy, inventory is pushed into the supply chain in anticipation of demand. This is done to ensure that products are readily available to customers and to minimize lead time. This strategy is particularly useful when demand is known and stable, and when lead time is short. By pushing inventory into the supply chain, companies can ensure that products are available when customers need them and can reduce the risk of stockouts.
The statement is not correct. A is correct answer Push inventory is typically used when demand is forecasted, and products are produced in anticipation of that demand. It is more suited for situations where there is stable or predictable demand over a longer lead time. When lead time is short and demand is known, a more appropriate strategy would be continuous replenishment or a pull inventory strategy. These approaches focus on responding to actual demand in a timely manner, minimizing excess inventory and ensuring that products are available when needed without the risks associated with overproduction.
Continuous replenishment is an ideal strategy in scenarios where demand patterns are consistent and lead times are short.
The answer should be A Why would you want to do Push Inventory when demand is known. Continuous Replenishment would help reduce holding cost and reduce inventory level.
The most suitable supply chain strategy when **lead time is short and demand is known** is: ### **A. Continuous replenishment** #### **Why?** - **Short lead times + stable/known demand** allow for **real-time, automated replenishment** with minimal forecasting errors. - Continuous replenishment **syncs inventory with actual consumption**, reducing excess stock and stockouts. - Examples: - Retailers restocking based on daily POS data (e.g., Walmart’s vendor-managed inventory). - JIT systems in manufacturing.