Final answer:
The buy-hold-sell model may be riskier due to costs associated with excess inventory and capital tied up in stock, whereas the sell-source-ship model can be more profitable with lower inventory costs and higher flexibility. companies like Amazon have leveraged the latter for substantial success by optimizing their supply chain management.
Step-by-step explanation:
The question you've posed deals with the two models used by retailers for supply chain management: buy-hold-sell and sell-source-ship. When comparing the two, the buy-hold-sell model might be considered riskier because it involves purchasing and holding inventory before selling it, which could lead to excess inventory and higher holding costs if demand is overestimated. Furthermore, this model can tie up capital and storage space and make a business more vulnerable to changes in market demand or price fluctuations.
In contrast, the sell-source-ship model, used effectively by Amazon and other retailers, may be more profitable as it reduces the need to hold large amounts of inventory. This model allows for more flexibility in responding to customer demand and generally requires less capital upfront for inventory. It is often associated with lower storage and holding costs, but it relies heavily on having a responsive and reliable supply chain. effective supply chain management is essential for retailers, both large and small, to determine optimal output and pricing strategies that align with their business models. Adjustments on the supply side may be more manageable over the long term, allowing businesses to scale up operations efficiently.