Kodak
Kodak
Order batching
One of the ways to mitigate the order batching is finding ways of reducing the transaction costs from the EOQ calculation perspective. In case where the demand tend to be more elastic than supply, the companies apply Just In Case Model (Warburton, 2004). They calculate based on Economic Order Quantity approach (EOQ), where they take into account the safety stock level and reorder point (Horngren et al. 2003). Also, Computer Assisted Ordering (CAO) used by Nabisco assists the company in ordering more frequently in smaller batches, it prevents from demand distortion and efficient scheduling.
Next, the manufacturer can allow shipping an assortment of the products from its plant to have a full-truckload. An alternative option is controlling and making a fixed delivery schedule. For instance, P&G makes time slot reservations for delivery of inventory to the customers (e.g. on the first and third Tuesday monthly). This makes the ordering across the supply chain less random, it is more balanced and predictable (Croson and Donohue, 2005).
Another way is hiring a 3rd party logistics partners. They are able to carry out economies of scales that the manufacturer-customer would not have been able to achieve that by themselves. In detail, the third party logistics are able to create a full-truckload by filling the trucks with the inventories for several customer-retailers that are located next to each other in the same location area (Warburton, 2004). Consequently, this minimizes the associated costs with inventory.
Price fluctuation
One of the ways to limit the forward buying and the bullwhip effect is keeping the prices as stable as possible. The usage of Activity-based costing (ABC) can assist the company in looking at the excessive costs associated with forward buying and limit such activity and choose Everyday