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You work for a company that manufactures lighting fixtures. From suppliers, all components are purchased, which the company then assembles into about 100 different luminaires. These are sold to various customers (retail chains, wholesalers, e-commerce companies) around Europe. The company’s management has now announced that due to problems with liquidity, capital must be released. Therefore, they have decided that the stock levels in all the company’s stocks must be reduced. The call is to reduce all sales and security inventories by 50%. The logistics manager has now asked you to investigate what consequences this will have on costs and delivery service.
a) How will the costs be affected by the current decision? Reason about which costs are affected, why they are affected, and whether they will increase or decrease.
b) How will the delivery service to the customer be affected by the current decision? Reason about which aspects of delivery service are affected, why they are affected, and ifthey are positively or negatively affected.