Question

List any two of the business conditions that make a company's supply chain operations a good candidate for postponement.

Answer 1

Solution-

Two of the business conditions that make a company's supply chain operations a good candidate for postponement are-

1. The accuracy of the forecast demand decreases with an increase in the time horizon. The farther the time window for which the demand is being forecasted, the more inaccurate it will be. Take for example an umbrella manufacturer who does not know what the demand will be for different colored umbrellas. The manufacturer will manufacture all white umbrellas and dye them later when umbrellas are in season and it is easier to predict demand of each color of umbrella. This way the manufacturer can stock up on white umbrellas early with minimal labor costs, and be sure of the demand before they dedicate time and money into predicting the demand so far in the future.
2. Demand projections for a product group are generally more accurate than projections for individual products. For example, it is much easier to forecast the total demand for LCD TVs than it is for an individual TV of a specific brand, model, screen size, resolution, and color contrast ratio.