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Demand Management, Order Management and Customer Service

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Demand Management

4. What are some of the logistics problems that might arise when supply and demand for a product are not aligned properly? What are some of the methods used to soften the effects of this imbalance?

5. What are the basic types of forecasts? What are their strengths and weaknesses?

Order Management and Customer Service

5. Explain the impacts of order cycle time length and variability on both buyers and sellers.

7. Organizations can have three levels of involvement with respect to customer ser-vice. What are these, and what is the importance of each?

9. Discuss the nature and importance of the four logistics- related elements of customer service.

10. Effective management of customer service requires measurement. Discuss the nature of performance measurement in the customer service area.

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The response addresses the queries posted in 723 Words, APA References

Demand & Order Management: Customer Service

Answer 1

Logistics Problem

If supply and demand are not aligned properly, it might result in to severe logistics problem, as the cost of logistics will be increased. The quality may also decline, which further results in to poor customer service. The delivery of products will also hamper. The activities of logistics will fall in turbulence. The elevation of logistics will be reduced, that poses further problems in the demand patterns. There will be chances of shortage in supply, which further lower the profitability as well as the productivity of the company. There will be a creation of imbalance in the production and operation department of the company, which further downsize the credibility of the company product. There will be a probability of the grave difficulties in the demand patterns of that particular product. Improper alignment will also create system overload and require last diminutive changes in the production.

Methods to Soften the Effects of Imbalance

There are various methods, which are used to soften the effects of imbalance created due to the improper alignment of supply and demand of a product. These are as follows:

Ø Channel spanning performance measure: Company should use this method to gauge the success for accessing the customers, which further soften the imbalance effectively.

Ø Customization of logistics network: In order to soften the imbalance, it is also necessary for the company to customize the network of logistics according to the requirements of the end users (Aligning a Misaligned Supply Chain, 2009).

Ø Consistent forecast: Company should also perform a consistent forecast, which will assist it to attain optimal allocation of resources that is essential for balancing the demand and supply of a product in a proper and accurate manner.

Answer 2

Types of Forecast

There are four basic types of forecasting, which are used to predict the future or demand for the particular product. These are as follows:

Qualitative: This technique is used in case of new product and the situation is vague. In this ...

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The response addresses the queries posted in 723 Words, APA References

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Operations Management -- Inventory

Use the inventory spreadsheet to perform necessary calculations, but please don't use just the spreadsheet. Explain how you reach your conclusion (for example, explain how various parameters were obtained; and please also explain your conclusion using calculation results from the spreadsheet).

Note that the spreadsheet calculates total cost without purchase cost. For both problems, you need to include it. So please add the purchase cost rate which is R*C where C is the unit purchase cost of the product.

1. A computer cable manufacturing company is evaluating two outside suppliers for a connector that is used in its production. The following data are known:
• The daily usage for the connectors follows a Normal distribution with an average of 1000 and a standard deviation of 100.
• Assume 365 working days every year.
• Annual inventory holding cost of this connector is assessed as 15% of the purchase cost.
• It wants to achieve a 95% service level for the connector.
• Each unit of shortage costs $500.

Supplier A is local, so it provides a faster (and more reliable) lead time, and the shipping cost is also lower. Supplier B is a bigger, national supplier, and it can offer a better price on each unit (purchase cost). The relevant parameters are given in the following table.
Supplier A Supplier B
Purchase Cost Per Unit $40 $39.5
Shipping Cost Per Order $100 $1000
Lead time Average: 2 days
Standard Deviation: 1 day Average: 6 days
Standard Deviation: 3 days

Which supplier should the company choose that will give it the lowest total cost (purchase + ordering + holding + shortage)? What will the company's inventory order quantity and safety stock be if it goes with the afore-chosen supplier?

2. RistoranteDiRoma offers two types of pizza (cheese or pepperoni) in its menu. Since, the restaurant does not specialize in pizza, the pizzas are ordered from another prepared food store. Luigi, the owner of the restaurant, estimates that the monthly demand for the cheese pizza is normal with a mean of 150 and standard deviation of 30. Similarly monthly demand for pepperoni is also normal with mean 180 and standard deviation 40. It costs $50 to place an order at the supplier (food store) and takes 5 days for the order to arrive at the restaurant. Cheese and pepperoni pizza costs $6 and $8, respectively. Assume that the annual interest rate is 12%. Luigi sets the maximum chance of stockout to 10% not to upset his customers and estimates that it costs $15 per pizza short including the loss of goodwill. (Assume 30 days/month).
a) Determine the economic order quantity (EOQ), reorder point (R), and the average number of shortages per month for each type of pizza. Also find the average monthly total cost for this system.
b) Luigi claims that it would help reduce the cost to order only the pizza dough from the prepared food store. He claims they could add the toppings when the demand is realized (when a customer orders a pizza) at an additional cost of $2. It costs $3.5 for a pizza dough and ordering cost remains the same at $50 per order. The delivery times will remain as before. Find the average and standard deviation of the monthly demand for the pizza dough. Also determine the economic order quantity (EOQ) and the reorder point (R) for the pizza dough.
c) Find the average cost associated with this alternative. Do you think Luigi should take this action?
(Hint: If R,C and R,P are the standard deviations of demand rate for cheese and pepperoni pizzas, then you can calculate the standard deviation of demand rate for all pizzas as .)

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