Case study

Question # 01 : Why did Gateway choose not to carry out any finished –product inventory
at its retail stores ? Why did Apple choose to carry inventory at its stores?

Answer : Gateway had a technique to abstain from conveying completed products stock in retail
locations. .The organization's system intended to plan a store network that would coordinate
market interest. It works on the customer relationship management strategy to produce the
products as per customer needs and demands While Apple targeted the customers to serve them
by providing the products on immediate basis which enhances the customers satisfaction and has
been a profitable marketing strategy.

Question # 02 : Should a firm with an investment in retail stores carry any finished –goods
inventory ?What are the characteristics o f products that are most suitable to be carried in
finished –goods inventory ? What characterizes products that are best manufactured to
order?

Answer : The decision depends on customer’s needs , preferences , delivery timings and
costs . if the customer need the product to be deliver on immediate basis than company must
carry the finished goods inventory in retail store and vice versa .

Following the characteristics of products most suitable for storage stock

1) Durable goods means long term storage capacity with less storage cost.
2) Goods demanded on seasonal basis plus having stable demand in market.
3) Fast moving and high value products.

Following factors to be consider while making a product in manufactured order

1) Customer demand which should be cost effective.

2) Highly valuable product.
3) Highly perishable product with high storage cost.
Question # 03 : How does product variety affect the level of inventory a retail store must
carry?

Answer :

Increase in quantity of the selling products : If there is an increases in selling of products

than which creates the deficiency or shortage of products in retail store and vice versa

More placement of products in stores : if the variety of products are placed in stores it may
create the chances of misplacements of products which highly affect on inventory level.

Question # 04 : Is a direct selling supply chain without a retail stores less expensive than a
supply chain with retail stores ?

Answer : Supply chain with retail stores comprises the way to serve the consumers through
several intermediaries, including wholesalers and distributors which include mark-up ratio and
also many retail stores cost . Direct selling refers to the selling of goods directly through
manufacturers or distributors with no mark-up ratio and no retail store cost .Direct selling
includes the few channels for meeting the consumers directly which may be high as compare to
the indirect selling so direct selling is not always cheaper than indirect supply chain.

Question 05 : What factors explain the success of Apple retail and the failure if Gate way
country stores?

Answer: Comparison of few Factors of both companies which clearly explain the suvcess of
Apple and failure of Gateway .

Factors Apple Gateway

Location Apple opened several retail Gateway has not consider any
stores in urban areas where retail store as it was a
number of targeted manufacturing company.
customers were more .
Delivery Timings Apple company serve the Gateway service of delivery
products to customers more time was not on immediate
timely mean on immediate bases.
 basis.
Customer Satisfaction Customers become more Less loyal customers as
loyal through timely services. compare to Apple.
Well Trained Personnel Well trained personnel were No intermediary was hired as
hired to serve the customers direct selling was practiced .
in best way .
Case Study

Zara

Question # 01: What advantage does Zara gain against the competition by having a very
responsive supply chain?

Answer: As customer demand is unpredictable in fashion industry Zara used a strategy of

responsive supply chain of 5 to 6 week cycle times which enabled the industry to enjoy greater
customers and results to sale the products at full price leads to more profit. Most responsive
supply chain strategy gives an advantage to Zara to minimize its inventories and also forecast
error. It also increases the customer’s loyalty to the brand.

Question # 02 : Why has Inditex chosen to have both in-house manufacturing and
outsourced manufacturing? Why has Inditex maintained manufacturing capacity in
Europe even though manufacturing in Asia is much cheaper?

Answer: Rapid changes of fashion trends Inditex started built in house manufacturing as a way
to quickly response. It makes new products according to the market demand and also makes
products in bulk to response the uncertain demand of customers . Despite of higher cost Inditex
has maintained large fraction of manufacturing capacity in Europe, this allows Zara to respond
quickly to changing fashion trends in Europe.

Question # 03 : Why does Zara source products with uncertain demand from local
manufacturers and products with predictable demand from Asian manufacturers?

Answer : Zara uses the responsive pull strategy as products with uncertain demands likely to be
produced at lower volume as compare to products with certain demand as to deliver products
without becoming obsolete because local manufacturers offer fast and flexible sourcing at low-
cost with greater lead time as it is manufactured in Asia . Zara’s main competitive advantage is
responsiveness according to the change in trends.
Question # 04 : What advantage does Zara gain from replenishing its stores multiple times
a week compare to a less frequent schedule ? How does the frequency of replenishment
affect the design of its distribution system?

Answer : To meet targets according to the fashion trends , it is compulsory to make sure that
always up to date inventory be available in stores and introduce the new designs also. Product
replenishment base on demands if demand is high it is to be replenished and vice versa. In a
situation of quickly changeable trends in fashion Zara need to be able to adjust their demands
quickly through increasing the size and also centralize its distribution design by handling its
global operations through distributors.

Question # 05 : Do you think Zara’s responsive replenishment infrastructure is better

suited for online sales or retail sales?

Answer : Zara’s 24 hour delivery times from Spain to outlets all around the world may not be as
efficient with online sales as it is with retail sales Fast Distribution System Permits Zara to
respond to trends very quickly. Lack of decentralized distribution means that it is better suited to
retail as online sales tend to have more a different product demand and customers expect quicker
delivery times.