Education Case

Cycle view? Or Push / Pull view?

Cycle view further questions-

What is the customer order cycle ? (@ customer's end)

What is the replenishment cycle ( at Retailer/ distributor end)

Manufacturing and procurement cycle - (more details)

What is the quantity of product needed in each lot? (For raw materials)

What is the response time that customers are willing to tolerate?

What is the cycle time of production?

Is there high demand uncertainty or low uncertainty? Demand is certain, predictable, global and highly unmet. China requires more than 21 Million ton of product.

If its high, there will no forecasting. Is there any mark down effect in the prices because of high demand uncertainty? But for low , what are they using?

Also is there uncertainty in terms of supply chain capability? I know a host of factors contributing to this maybe the power and gas issues, but are there other frequent issues related to frequent breakdowns and quality?

In terms of product life cycle, at what stage is this company's product....respond on basis of the following:

Demand? Is it certain, predictable? Or the opposite

Price? Is it the sole criteria for customer choice because of high competition? price: It is a commodity sourced through an oligopoly (a market in which control over the supply of a commodity is in the hands of a small number of producers and each one can influence prices and affect competitors) of suppliers. Its price is determined by iron scrap which the product (Direct reduced Iron) replaces. (Substitute pricing methodology)

Price is determined by macroeconomics as steel is indicator of country's growth.

Any information on inventory? What is the average amount of inventory carried? (in number of days or units) The company has five days of product inventory in silos, three days of product in yard and 10 days of raw material in yard and 21 additional days of storage planned because of potential delays in ship arriving with raw material.

Is there seasonal inventory? Details? Seasonal Inventory:

The inventory depends on business cycle/ economy growth. One ship load is 35,000 tons about 1 week of raw material during monsoons.

Are they ever out of stock? How often? (stockouts) Stock-out potential: Ship voyage has potential of 22 days of rough sea per year which restrict supply by sea. This is the weather window for which safety stock of 21 days (or 3 ship loads) is now planned. Stock out costs 11 days of downtime and startup