Why did gateway choose not to carry any finished product inventory at its
retail stress? Why did apple choose to carry inventory at its stores?
Answer: Gateway applied a strategy to avoid carrying
finished goods inventory in retail stores.
By this way customers had chance to customize the configurations
according to their mean of work. Moreover there was also opportunity to try any
sample product with in the store. By this strategy gateway had an aim to design
a supply chain design that would match this demand.
The decision of gateway
not to carry finished goods inventory at retails stores are related to these
Allow more flexibility
in product configuration. This flexibility would allow gateway to manage
customer’s demand, since the final product would only be configured after
This would also allow the company to imply a Customer
Relationship Management strategy, since the company would know the specifics of
customer’s needs and would be able to target customer for future products.
On the other hand,
apple had aimed to fulfill the customer demand immediately and with provide the
experience of finished product to customer. There is low shipment cost, because
bundle of product shipped to retails stores and customers can pick from these stores.
a firm with an investment in retail stores carry any finished goods inventory? What
characteristics of products those are most suitable to be carried in finished goods
inventory? What characteristics products those are best manufactured to order?
Answer: The decision should be based on customer preferences
and on delivery times and costs. If customers prefer online shopping, then there
no need to carry finished goods at a retail store. If the delivery time with
respect to the customer’s needs is deemed to be high (groceries), then there is
a need to have finished goods inventory. On the other hand, if the delivery
time is reasonable/acceptable (e.g. furniture), then the company could do
without having finished goods inventory.
Characteristics of product to carried in finished
inventory cost products
with extra inventory life
• Products for less waiting time (groceries)
• High demand product in market
Characteristics products that best manufactures to
• Low inventory life
• High cost inventory products
• Low demand product in market
• Products for which customer can wait
• Products with certain demands.
Question3. How does
product variety affect level of inventory a retail store must carry?
variety of product related with inventory cost and also varies with physical
inventory at store for each and individual product.
Higher variety of products implies that more products have to be keeping at the store and subsequently, the amount of each product will be
smaller. With high product variety the products and quantities put away at the store have to be exceptionally carefully. Otherwise
there will be risk of low level inventory and low sales.
the direct selling supply chain without retail stores always less expensive
than a supply chain with retail store?
yes the direct selling supply chain without retail is less expensive. Because it
saves the cost of retail store operation. Shipping cost is also less in this
channel. It avoids the infrastructure cost between two configurations. This is
also easy to handle return policy between two configurations.
Question5. What factors explain the success of Apple
retail and the failure of Gateway country stores?
Answer: The customer experience that Apple has been
providing is an important factor of differentiation in contrast Gateway was not
providing such a level of customer service and experience. Delivery time was
another significant factor that helped Apple, since the customer was able to
get the product while at the store, gateway also fail to deliver product to
customer in short delivery time. Eventually Apple was the only retailer of their
products, that guaranteed excellent service across the board.