Final answer:
Option (3), Wal-Mart and Levi Strauss collaborating on demand forecasting exemplifies Collaborative Planning, Forecasting and Replenishment (CPFR), which enhances supply chain efficiency and optimizes inventory management while leveraging economies of scale.
Step-by-step explanation:
When Wal-Mart and Levi Strauss collaborate on demand forecasting to optimize the flow of materials along the supply chain, this is an example of Collaborative Planning, Forecasting and Replenishment (CPFR). CPFR is a business practice where supply chain partners share information and planning to ensure a smooth flow of goods and optimize inventory levels. This collaboration can lead to more accurate forecasts, reduced inventory costs, improved production schedules, and a more efficient supply chain overall.
In the context of Wal-Mart and Levi Strauss, such collaboration can also exploit economies of scale where they benefit from reduced costs per unit, thanks to the increased quantity of output, similar to the benefits seen in a larger Wal-Mart or Costco warehouse store.
Incorporating technology and policy for uninterrupted supply chains, protecting labor rights, and addressing environmental impacts as part of the broader initiative towards sustainability in the supply chain is also crucial. This indicates a shift towards integrating ethical considerations with business efficiency.