edf40wrjww2CF_PaperMaster:Desc
The company is divided into three kind of stages: plants warehouses, where the products are produced (each plant with a single product line) and stored until they are transported to the central warehouse. Here a division is made: the freestanding products are taken to regional warehouses according to demand, and built-in appliances products are delivered to the customers.
Main Costs:
The inventory management follows the decentralization policy of the company so sometimes there is not a sufficient communication through the supply chain and this can lead to a situation of stock out, which could end in customers unsatisfaction, or to higher inventory levels, which also has high costs. Associated with this there are the discounts made when there is a late on fulfilling demand. Another aspect is the high transportation costs because all products are shipped to the central warehouse after production, and then send to each regional warehouse, but as some of these are near the plants warehouses many of these costs are useless. The need for the trucks to be full loaded is another bad aspect, since it takes more time to get to the next stage and could create stock out at some point, showing the weakness of a non flexible system. That could lead to a situation of Bullwhip effect. Related to this is the risk of this system long supply chain that can take 2 to 6 days for the products to arrive to the final customer.
Main Benefits:
On the other side, by having inventory at the regional warehouses is less likely to run out of stock if there is a demand variation so consumers can satisfy their needs. This aspect also carries less risk to the delivery process since all demand is not dependent to the centra ...