Discuss the importance of collaboration within a supply chain when performing aggregate planning
What will be an ideal response?
Answer: Supply chains can influence demand by using pricing and other forms of promotion. Marketing and sales often make the promotion and pricing decisions, and they typically make them with the objective of maximizing revenue. However, changing the demand pattern can change the cost the company incurs to meet that demand. Thus, pricing decisions based only on revenue considerations often result in a decrease in overall profitability. The same is true when thinking of the supply chain. The retailer sets the price and runs promotions to generate demand. This is regularly done without taking into account the impact on the rest of the supply chain. Therefore, the combination of pricing and aggregate planning (both demand and supply management) can be used to maximize supply chain profitability.
When performing aggregate planning, the goal of all firms in the supply chain should be to maximize supply chain profits because this outcome leaves them more to divide with each other. For profit maximization to take place, companies need to devise a way to collaborate and, just as important, determine a way to split the supply chain profits. Determining how these profits will be allocated to different members of the supply chain is a key to successful collaboration.
You might also like to view...
When there are preferred shares outstanding, the calculation of book value per share of common stock must first take into consideration the claims or equity of the preferred stock
a. True b. False Indicate whether the statement is true or false
An advantage of using the general journal is to prevent errors
Indicate whether the statement is true or false
Teams are clearly ______.
a. semiautonomous b. self-directed c. management-directed d. undirected
In terms of the communication model, ________ is the process whereby a receiver assigns meaning to a message
A) sourcing B) encoding C) decoding D) feedback E) receiving