Question

In: Math

SUPPLY PAIR L P Zara warehouse -> Zara Store 2 4 NY Distribution Center -> Zara...

SUPPLY PAIR L P
Zara warehouse -> Zara Store 2 4
NY Distribution Center -> Zara warehouse 2 3
Inditex factory -> NY Distribution Center 4

12

Bullwhip ratio for pair "Zara warehouse -> Zara Store" = 2.5

Bullwhip ratio for pair "NY Distribution Center -> Zara warehouse" = 3.21

Bullwhip ratio for pair "Inditex factory -> NY Distribution Center" = 1.88

1. Calculate the cumulative ratio between the Inditex factory and Zara Store.

Solutions

Expert Solution

  • As currently Zara owns 20 manufacturing facilities, for cutting and dyeing, it needs to increase it number of manufacturing facilities, globally to secure more production, plus it should also engage and operate more contractors and sub contractors for manufacturing different products at different locations so that it can manage finished inventories with focus on optimal order time for every item.
  • It has to start research on new materials and clothing concepts in order to beat the competition, which Zara currently lags in. It should replenish its new designs more frequently by its warehouses and distribution systems.
  • It must use a centralized warehouse to replenish other sub stores/ warehouses, after receiving materials from production sites, and may even subcontract these activities sometimes
  • Zara currently makes a fast replenishment by producing every product in small quantities so that new designs are can be sent to stores quickly. This costs inventory carrying costs to Zara each time. Hence, it should produce in large quantities as per customer taste, while maintaining Economic Order Quantities so that inventory holding and carrying costs are reduced each time, there by adding to its profit margins.
  • Rather than making a quick decision on distribution of inventory, it should focus on not making a wrong decision. That will optimize its JIT and forecasting technique.
  • ratio = 1:2

milcah answered 11 months ago
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