In studying positioning of inventory in supply chains, which, if any, of the following is most appropriate?
I. As order decoupling point moves towards source, inventory investment goes down.
II. As order decoupling point moves towards the source, customer lead time gets longer.
III. As order decoupling point moves towards the source, inventory investment increases.
IV. As order decoupling point moves towards the source, customer lead time is unchanged.
A) I
B) II
C) III
D) IV
E) I and II

Question

Quizplus · Accepted Answer

I is correct because moving the order decoupling point closer to the source typically means holding less finished goods inventory, thus reducing inventory investment. II is correct because moving the decoupling point towards the source generally increases the portion of the supply chain that operates on a make-to-order basis, which can lengthen the lead time for customers.

In Studying Positioning of Inventory in Supply Chains, Which, If