Amount of = inventory

Tier 2 Suppliers
³This is the time to make money. Let¶s make 450! He will buy it all.´

Tier 1 Suppliers
³@%*$! 250 pcs this year compared to 80 last year. Business is booming. He will take 350.

Manufac turer
³Wow! 6! The demand seems to be increasing. I¶d better make 12 for him ! No, wait, I¶ll make 12 for each distributor.

Distributor
³Hmm. Last period, he ordered 1 pc. Now, its 4 pcs. Maybe demand is up. I better order 6. That a@##$# never delivers on time´

Retailer Consumer
³Custome rs like this model. I better order 2 more. The bugger (distributo r) never supplies on time´ ³I¶ll buy 2´

That idiot (retailer) is taking is not taking them because he already has two.´ Retailer ³Damn !! No one¶s picking up these two pieces.Amount of = inventory Tier 2 Suppliers ³He (T1 spplr) is not going to pick up bal 367 pcs ?!? I¶m finished.´ No new customer .´ Tier 1 Suppliers ³He (manufactu rer) orders 250 and now he wants to pick up only 83 !! Curse that a@#$#@ !! And curse me for making 100 extra´ Producer ³50 in stock !?!? Where did my calculatio ns go wrong ?´ Distributor ³There are two pcs lying.

what are the two causes of increased inventory levels ? A. actually. . lack of reliability of manufacturer to supply the distributor on time (³That a@##$# never delivers on time´) and lack of reliability of the distributor to supply the retailer (³The bugger never supplies on time´) 2. they made assumptions instead of using a forecasting model based on facts.Q. the 2 causes are 1. tier1supplier (³He will take 350´) and tier2-supplier (³Let¶s make 450! He will buy it all´). unprofessional demand-forecasting by the manufacturer (³I¶ll make 12 for each distributor´).

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