Inventory reducing with flow model

As shown in Fig. 6.3, order information flows from the customer to the manufacturer s online store. Inventory is held at the manufacturing plant. The manufacturer ships the products to customers using carriers, as per actual orders. To reduce response time, the manufacturer can contract with carriers with faster modes of transportation. Fulfillment time depends on the distance between the manufacturer s warehouse and the location of the customer. Note that in this model a retailer can also be the immediate customer, and it plays the role of an intermediary. The carrier would now deliver to the retailer, and customers would visit the retail stores to make a purchase. Fulfillment models using a retail store are discussed in Chap. 5. In a variation to this model, Dell uses a merge in transit facility, described later. 

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