Exam CSCP topic 1 question 656 discussion

Potential for Upstream Variation: Increased Uncertainty: By postponing customization, companies may have to hold more generic, uncustomized inventory, which can lead to greater uncertainty in demand for specific components and raw materials. Demand Fluctuations: If demand for specific product variations or customizations is uneven, the postponement strategy might exacerbate these fluctuations upstream, leading to unpredictable material requirements.

C. Small size of order batching** Small size of order batching can lead to more frequent orders and fluctuations in demand as it increases the variability in the ordering patterns. This can cause the bullwhip effect, where small changes in consumer demand can result in larger variations in orders placed upstream in the supply chain. While the other factors can influence demand and supply chain dynamics, they are less directly related to causing upstream variation: - **A. A liberal return policy** might affect customer satisfaction and return rates but doesn't directly cause upstream demand variation. - **B. Use of postponement technique** is a strategy to delay product differentiation, which can actually help reduce demand variability by allowing more flexible responses to customer orders. - **D. Stabilization of prices** generally helps to reduce demand variability by providing more predictable pricing for customers.

A liberal return policy allows customers to easily return products, which can lead to increased demand variability upstream in the supply chain.