IMPACT OF TRADE DEALS ON INVENTORIES.

Academic Article

Abstract

  • This paper reports results of a study using dynamic simulation to assess the impact of trade incentives on inventory levels. A grocery distribution system was modeled for the study, incorporating for such factors as the level of the incentive, the level of sales response in the marketplace to the incentive, and the extent of reduction in sales at the conclusion of the incentives. The results indicate that substantial increases in average inventory occur, even under relatively ideal conditions, for the system modeled. It follows that purchasing managers should carefully weigh the cost of increased inventory levels prior to accepting an incentive offer.
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    Author List

  • Powers TL
  • Start Page

  • 39
  • End Page

  • 42
  • Volume

  • 53
  • Issue

  • 1