3
SCMMS2 (Subject) / Product Life Cycle Planning (Lesson)
- Name four sophisticated buying strategies. Buy the forecast Hedge: Buy the forecast +10% Use a probability risk adjusted hedge Risk adjusting using a continuous gamma distribution
- How to optimize markdowns? 1. Forecast : estimate the sales lift that would result from a given markdown 2. Optimize : determine the depth and timing of markdowns to maximize revenue earned from the remaining inventory 3. Test: Improve the accuracy of the estimates in step 1 through price tests i which you vary the price to determine the sales response to particular markdows
- What are the three categories for life cycle planning? When lead time is greater than or equal to the life, replenishment is not possible and you are forced to make a single buy. When a product life is much longer than lead time, e.g. 1 year Life to 4 weeks lead time, then the product goes into replenishment soon after launch In the intermediate case, when lead times is little less than the life cycle, a few replenishment can be made or a variation of a single buy/allocate to distribution center and replenish from there