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What is the relationship between inventory and the 9 competitive concerns talked about in Chapter 1, “Using Operations to Compete”? Suppose that two completing manufacturers, Business H and Business L, are comparable other than that Business H has much higher investments in basic materials, work-in-process, and finished items stock than Business L. In which of the nine competitive concerns will Company H have an advantage?
The relationships in between inventory and the 9 competitive priorities is the correct amount of inventory to fulfill their competitive concerns.
When utilizing the operations to compete the below concerns: Low-priced operations. Expenses include materials, scrap, labor, and equipment capability that are squandered when items are faulty. Competitor L will take pleasure in competitive advantages with lower setup, materials, labor, devices, and stock holding costs.
More features, toughness, and security result from much better designs. High stocks force rival H to select in between scrapping obsolete styles. Rival L will still have an advantage
Consistency in conforming to develop requirements needs consistency in provided materials, setups, and procedures.
Little lots made regularly tend to increase consistency. Competitor L will still have an advantage, again.
Shipment speed. Big lots take longer to produce than small lots. A client will wait less time for rival L to set up and produce orders made in little batches
Contrary to expectations, large inventories do not correspond to on-time shipment. It’s more like, lots of stock equals lots of mayhem. Big lots make big scheduling issues. Big lots get dropped, mishandled, and pilfered.
The majority of lean companies experience significant improvement in on-time shipment.
This response resembles that offered for top quality. Low inventories lead to getting new designs to the market quicker.
Lean companies normally don’t declare an advantage in personalization.
However, large inventories provide no advantage with regard to customization either. It remains unlikely that a customized product will be found in inventory, no matter how large.
Mass customizers compete on service or product variety. They will keep products at raw material or component levels until a customer orders a specific configuration. Inventories are at as low a level as possible.
Lean (low inventory) companies tend to produce the same quantity of every product every day, but they claim considerable volume flexibility from month to month. On the other hand, a large finished goods inventory can be used to absorb volume fluctuations.
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