Question

1. What are the different kinds of demand pooling strategies? and Explain the benefits of demand pooling on inventory costs.

Answer 1

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The demand pooling is a concept that suggests the demand variability in the market reduction if one can aggregate. Different kinds of demand pooling strategies are Location pooling, product polling, lead time pooling, capacity pooling. Demand pooling strategies are use to demand inventory pooling and demand pooling is mainly used only for inventory.

The inventory demand pooling means consolidation of multiple inventory locations into a single one, help to combine the inventory as an effect that helpful for the industry to reduce the demand variability, reduction in the operational cost, increase the productivity and profit, helps when a component are out of stock in the market.

The inventory demand pooling means consolidation of multiple inventory locations into a single one Helpful in reducing the holding cost, backorder cost, and maximum value for the number of items in inventory.

It helps to reduce risk without transferring the risk on another but destroys that risk by own, helps in avoiding the stick out conditions by maintaining the lowest inventory level, by using centralization that allows the system to remains in the normal operations under a higher level of variability.