A firm has increased finished-goods inventories for several products to compensate for increased variability in demand. The firm analyzed shipment data and determined that the variability was due to a few customers placing large orders for single shipments to obtain discounts. Which of the following actions is the firm most likely to take to maintain sales and reduce variability in demand?

Question

Quizplus · Accepted Answer

By encouraging high-volume customers to place blanket orders, the firm can ensure a steady, predictable demand for their products, thereby reducing the variability caused by large, sporadic order placements. Reducing discounts for large orders may discourage high-volume customers from placing orders, which could reduce sales. Implementing extrinsic forecasting methods may provide insights into demand patterns, but it may not directly address the underlying issue of large order variability. Increasing safety stock can provide a buffer against demand fluctuations, but it may also tie up valuable resources and increase holding costs.

A Firm Has Increased Finished-Goods Inventories for Several Products to Compensate