Question

With respect to an SCM (Supply Chain Management) value chain, the push model is also called ________, which means the production process begins with a ________ that is simply an educated guess as to anticipated customer demand.

a) Demand-driven, concrete order
b) Forecast-driven, sales forecast
c) Pull model, specific order
d) Just-in-time, customer order

Answer 1

The push model in SCM is known as forecast-driven, where production is based on a sales forecast, not a specific customer order, aiming to predict customer demand.

Step-by-step explanation:

In the context of Supply Chain Management (SCM), the push model is also referred to as forecast-driven. In the push model, the production process begins based on a sales forecast, which is an educated estimate of the expected customer demand, rather than on a specific customer order. This approach contrasts with the pull model, which starts production in response to a specific customer demand. The forecast-driven method creates a prediction of customer needs using historical data and market analysis, and then pushes products to the market in anticipation.

Supply chains utilizing the push model can sometimes lead to excess inventory or shortages due to inaccuracies in forecasting. This model is often used for products with relatively stable demand patterns and long lead times. It is part of demand and supply management, which is fundamental in understanding market operations and how changes in demand and supply lead to changes in prices and quantities.