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Question 254 - CSCP discussion

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A key challenge in managing the supply chain for an innovative product is that:

A.
contribution margins will be slim.
Answers
A.
contribution margins will be slim.
B.
the product life cycle will be long.
Answers
B.
the product life cycle will be long.
C.
product demand will be volatile.
Answers
C.
product demand will be volatile.
D.
inventory levels must be minimal.
Answers
D.
inventory levels must be minimal.
Suggested answer: C

Explanation:

Managing the supply chain for an innovative product presents the challenge of volatile product demand. Here's why:

Market Uncertainty: Innovative products often face uncertain demand as market acceptance is unpredictable.

Rapid Changes: The market for innovative products can change rapidly due to technological advancements, shifts in consumer preferences, and competitive actions.

Demand Forecasting: Accurately forecasting demand for innovative products is difficult, leading to potential mismatches between supply and demand.

Inventory Management: Volatile demand requires flexible inventory management strategies to avoid stockouts or excess inventory, both of which can be costly.

Fisher, M. L. (1997). What is the right supply chain for your product? Harvard Business Review.

Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2008). Designing and Managing the Supply Chain. McGraw-Hill.

asked 16/09/2024
Mpho Ntshontsi
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