Logistics and
Supply Chain
Management
TUTORIAL 5: INVENTORIES, COST AND SC STRATEGIES
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MS. BING HAN
Case Study: A Pain in the Chain Group Coursework
EBU6609 LOGISTICS AND SUPPLY CHAIN MANAGEMENT 2
Case Study– A Pain in the Chain
Situation Analysis – What’s the problem?
Possible solutions Recommendation
EBU6609 LOGISTICS AND SUPPLY CHAIN MANAGEMENT
1. Draw a supply chain (primarily downstream) with Exceso as the focal company, with all stakeholders marked.
2. Draw a diagram to explain how Mart can digest 3000 cases of the 4-pack.
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Case Study: Trade Promotion
Forward buying: customers move up future purchases to the present.
Trade promotion lead to significant increase in lot size and cycle inventory because of forward buying by the retailer. This generally results in reduced supply chain profits unless the trade promotion reduces demand fluctuation.
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Objectives of the Manufacturer Induce retailers to use price discounts,
displays, or advertising to spur sales. Shift inventory from the manufacturer
to the retailer and the customer. Defend a brand against competition.
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Reactions of the retailer
1. Passthroughsomeorallofthepromotion to customers to spur sales.
2. Passthroughverylittleofthepromotionto customers but purchase in greater quantity during the promotion period to exploit the temporary reduction in price.
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Case Study – further discussion
Faced with a short-term discount, it is optimal to pass through only a fraction of the discount to the customer, keeping the rest for themselves.
Simultaneous, it is optimal for the retailers to increase the purchase lot size and forward buying for future periods. Thus, trade promotions often lead to an increase of cycle inventory in a supply chain without a significant increase in customer demand.
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Solutions:
Every Day Low Price (EDLP) Machine Learning
Other algorisms
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Coursework – checklist Identification of main issues and problems
Generalisation and evaluation of alternative solutions
Recommendation Justification and solutions
Implementation issues
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Coursework – checklist
Cover page – all student names, student numbers, group number
1 submission as a group – electronic version, by the group leader, but others have to cross-check after submission.
File name – ‘EBU6609_Group XX_Company name’
Screen-shots after submission, just in case!
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Skills to be developed:
◦ Analytical skills – deal with both quantitative and qualitative data
◦ Time management skills – allocation of time, resources
◦ Decision making skills
◦ Written communication skills – case
◦ Persuasion/presentation within/outside groups
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