Inventory consignment

The main difference under consignment inventory is that the manufacturer continues to own the retail consignment inventory until the product is sold to the customer. Thus, consignment inventory is equivalent to the manufacturer purchasing store shelf space and choosing inventory levels to maximize his profits. Coordination is achieved because the supply chain decisions are made by one decision maker. Such an approach is common in the provision of spices the spice racks in many retail stores are managed by the supplier. 

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Seasonality must be considered when applicable. For some products, sales volumes peak at certain times of the year (such as toy sales at Christmas) in other cases, raw materials, such as fresh fruits and vegetables, may only be available at specific times. Both cases require out of-season storage. Manufacturers must invest in warehouses, use third parties, or provide incentives to intermediaries so they perform the storage function. For example, manufacturers might offer a seasonal discount or consignment inventories to wholesalers or retailers who agree to take early delivery. 

Activities Affecting Voiume Improved forecasting techniques, supplier-provided consignment inventory... 

TopOil, a refiner in Indiana, serves three customers near Nashville, Tennessee, and maintains consignment inventory (owned by TopOil) at each location. Currently, TopOil uses TL transportation to deliver separately to each customer. Each truck costs 800 plus 250 per stop. Thus, delivering to each customer separately costs 1,050 per truck. TopOil is considering aggregating deliveries to Nashville on a single truck. Demand at the large customer is 60 tons a year, demand at the medium customer is 24 tons per year, and demand at... 

What is the annual cost of MoonChem s strategy of sending full truckloads to each customer in the Peoria region to replenish consignment inventory ... 

How does your recommendation impact consignment inventory for MoonChem ... 

Corbett, C. 2001. Stochastic inventory systems in a supply chain with asymmetric information cycle stocks, safety stocks, and consignment stock. Operations Research. Vol.49,487-500. 

Consigned Vendor Managed Inventory With or without consignment stock, associated to Self-billing... 

Made-to-order manufacturers should calculate the consignment parts needed to determine the inventory required for operations in due time. 

Customers may insist on consignment deUvery as in VMI, where the supplier owns the product at a customer s facility until it is sold. This is a daunting logistics issue for the supplier, as it must monitor the inventory level at customer s premises. On the positive side, the supplier can better estimate when deliveries need to be shipped out. 

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