In the lecture for Continuous Replenishment Models, we saw that a typical produc

Question

In the lecture for Continuous Replenishment Models, we saw that a typical product life cycle starts with the product launch, then moves into a period of replenishment, and then to its end of life period.

Which of the following would characterize supply and demand in the replenishment stages of a product's life cycle?

Select one:

a. Cost is often of secondary consideration.

b. Product availability is critical to capture the market (“first mover advantage”).

c. Gross margins are often high, and short lead times are critical for gaining sales.

d. Demand has become more certain and supply is predictable.

e. Demand is very uncertain and supply may be unpredictable.

Explanation / Answer

d. Demand has become more certain and supply is predictable.

In the replenishment stages of a product’s life cycle, the demand becomes so certain that accordingly the Firm is aware when to commence with the refilling process of the product. Further, when the supply is predictable, it helps in ascertaining the quantity required in the market to replenish the product at the Production phase. Hence, together this would characterize supply and demand in the replenishment stages of product’s life cycle.

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