Is it always better to have a long chain than a short one when dealing with...

Is it always better to have a long chain than a short one when dealing with demand uncertainty?

Expert Solution

Answer: Supply chain management is a very important and process-oriented planning of flow of money, information and goods throughout the chain from customers to raw materials. A capable supply chain helps in lowering the cost and improves the efficiency of the operation.

As far as long or short chain design of the supply chain is concerned, the call totally depends on the market situation and demand pattern. If the demand is highly uncertain then we can not afford the long-chain, because long-chain take a long time to respond to the demand and due to long time being taken inflow of material it is not optimum to have a long chain under the demand uncertainty, event when we know that the long-chain cost less and offers more options.

Therefore, if the demand is uncertain and it is very difficult to predict the demand trend, we should opt for short-chain, as the short-chain costs more but takes less time to respond to the demand variation and this helps in meeting the demand with a short lead time of supplies and avoids the loss of sales. Short supply chain offers better co-ordination and control over the inventory level which further lowers the cost of piling up excess inventories.

keosha answered 6 months ago

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