Inventory-related risk

Note that although in this model the retailer is the sole decision maker and therefore seems to possess some power in the chain, he also bears all the inventory-related risk. In addition, customer acquisition spending incurred by the retailer not only benefits him but also benefits the wholesaler. As we will demonstrate later, this leads to the suboptimal performance of the channel. 

Note that in Model D, as opposed to Model T, the wholesaler bears all the inventory-related risk. The retailer still incurs all the customer aequisition costs that will benefit not only him, but also the wholesaler. Hence, none of the players has an incentive to behave system-optimally, as we will show later,... 

A different but somewhat similar contract works for Model D. We need a contract that would allocate some inventory-related risk to the retailer, while at the same time allocating some marketing expenses to the wholesaler. One such contract would be for the retailer to compensate the wholesaler for each unit of the inventory carried over while the wholesaler subsidizes a portion of... 

Some papers consider a multiproduct inventory problem with substitution. For example, Bassok et al. [13] consider a model with N products and N demand classes with full downward substitution, i.e., excess demand for class i can be satisfied using product j for i > j. They show that a greedy allocation policy is optimal. However, there are no pricing decisions in their model. Meyer [106] considers a multiproduct monopoly pricing model under risk. The firm must make decisions for prices, productions, and capacities before actual demand is known. However, his model does not consider explicitly the inventory related costs. 

The ASSE Risk Assessment Institute provides a seven-step process for conducting a risk assessment (American Society of Safety Engineers, n.d.) 1. Gather data An organization should complete an in-depth inventory of all hazards and related risks. 

For situations of high chemical risk, this book is at the level of preliminary analysis of risk (hence its title), that is to say, at the first stage of risk inventory, these linked to chemical products and their implicit chemical reactions. It brings together substances and procedure. On the other hand, a deep understanding of work routines, implicit in risks other than chemical, is necessary. Certain areas of activity are excluded from this book, notably related to phytosanitary products and equally, the Interaction of chemical products with the environment have been ignored. 

Although REACH involved a revision of most EU chemical control legislation, one existing directive that was not incorporated into REACH is the Solvent Emissions Directive [26]. The aim of this Directive is to prevent or reduce the effects of volatile organic compounds (VOCs) on the environment (mainly via the atmosphere) and reduce the potential human health risks from solvent-based activities. Most of the provisions of the directive relate to emission and inventory control, but one part of the directive has potentially negative consequences in terms of Green Chemistry. 

The GHS is not intended to harmonize risk assessment procedures or risk management decisions (such as establishment of a permissible exposure limit for employee exposure), which generally require some risk assessment in addition to hazard classification. In addition, chemical inventory requirements in various countries are not related to the GHS... 

The only subsequent regulatory development thus far under TOSCA, directed specifically at soluble silicates, was a proposed rule (54) under Section 8(a) which would require manufacturers to keep certain records and report production and exposure related data on approximately 2300 chemicals to EPA. This information was held to be necessary to rank chemicals for investigation and to make preliminary risk assessments. Sodium silicate, potassium silicate, sodium metasilicate and sodium orthosilicate were included on the candidate list, presumably because reports to the initial inventory showed them to be manufactured in high tonnage volume. 

Economists also consider risk as multidimensional (Dahl etal, 1993). They have coined names for a variety of risks. Some of these, applied mostly to stocks, bonds, and other purely financial instruments, are market risk (related to the CAPM model and the above described parameter beta ), volatility risk (applied to options, primarily), currency risk, credit risk, liquidity risk, residual risk, inventory risk, etc. 

Let us assume an in-transit holding cost rate of 22%, less than the onsite rate stated in Example 4.2, reflecting the fact that the in-transit rate covers only the cost of capital tied up in inventory (in this case, tied up in accounts payable and on the books in the "liabilities" column of the firm s balance sheet) and possible other risk-related costs like the risk of loss and/or damage in transit. Thus, with an item cost of 20, the annual in-transit holding cost is = (0.22)( 20) = 4.40/year. Let us also assume that the lead time in this case comprises the entire transit time (i.e., not allowing for a separate, constant order processing time), such that Xr = = 5 days. Finally, let us assume that the hard-working people... 

Pull defines the operational situation after which much has been accomplished in applying the lean process and inventories can be maintained in relation to the pull as represented by customer orders. Waste from having excessive product in inventory, and all that implies, is minimized—for example, the cost of excess space, the financing of excess inventory, the cost and risk of additional handling of inventory, etc. 

From the perspective of processes carried out by companies in the supply chain the six areas of risk can be indicated (Spekman and Davis 2004, pp. 414-433). The first three areas pertain to flow processes carried out in the supply chain flow of goods, flow of information and flow of money. The last three areas include ICT systems, relationships with suppliers and aspects of corporate social responsibility. Risk related to goods is associated with the costs of excessive inventories and loss or damage of cargo. The information flow process is exposed to disruptions caused by, e.g., computer viruses or network problems. 

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