What if a company is providing a product with a highly variable demand? Shall it just stop producing it? Thanks!
Is it then convenient to outsource these kinds of products?
What if a company is providing a product with a highly variable demand? Shall it just stop producing it? Thanks!
Just a quick thought: the decision whether to produce or abort this product would be contingent on two notions:
1. The capacity to flexibly react to demand fluctuations (i.e., close to zero set-up cost for production capacity)
2. The possible speed of production (i.e., can an observed demand peak be almost instantly catered for?).
If these two basic conditions are met, and if the profitability of the product is attractive, then keeping this product in the portfolio might make good sense.
Hope this helps!
Hey,
It depends on the specifics of product and demand: the best case scenario you just produce when you get an order and you completely eliminate such risk (an alternative way is to have semi finished goods and to just personalize them depending on demand - it can work in some cases).
If nothing else works the company should evaluate/build scenarios around what will happen and try to decide based on it - even under very unpredictable demand, it might worth to keep producing and selling the good.
btw, if you do such analysis always take into consideration the salvage value of the products
Best
Bruno
Is it then convenient to outsource these kinds of products?
Hi Ornella,
it all depends by the objective of the company; for example
If you can add which was the objective in the case it could help to clarify the best approach.
Best,
Francesco
Hi,
I will analyze it the following way:
1) Diagnostics:
2) Analyzing the solutions:
Best
is it the convenient to outsource this kind of products?