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Company: Amazon

a. Discuss the influence of three to four of the trade-offs from the following list and give an example of each in relationship to the chosen company:

It is very necessary to note that trade-offs fall into the category of situations where you should be required to balance things or you can choose form the two things that cannot be held together. This influences business greatly since we are forced to have the requirements that we do not like but since the business requires them or their necessity is identified in the business for us to achieve something else that we need in their presence. Sometimes we are forced to balance the factors in business at the same time and they cannot be attainable due to various influencing factors.

We should need to realize that there is great things that the trade-offs have much more things for their buyers and sellers when it comes to mergers and acquisitions of other items as its decision to use it will result in the usage of the stock instead of cash as this will affect the shareholders as witnessed in Amazon company.

The following trade-offs have great impact on Amazon company and have been to related to several number of issues related to business treasure and market stocks.

The first one to be discussed is Lot Size-Inventory. This is inventory that results whenever shipping costs, quantity price discounts, setup costs or similar considerations make it more economical to purchase or produce in larger lots than are needed for immediate purposes. When the prices of certain items in a stock are reduced or discounts have been applied to customers, the quantity of the stock sold will increase since the supply of products increase when prices reduce making the company to sell more. A good example of this is as follows. Relating this to the Amazon, we should need to understand that when the prices of the products are increased the purchase of the given product will decrease since customers can’t purchase products at high prices. Therefore, these costs are always controlled for it not to go innate (Steve, 2012).

The second trade-off to be addressed is the Inventory-Transportation Cost.

This is the cost incurred during the transportation of stock from the warehouse to the company and also from the business to the customers’ destination. When the transportation cost from the warehouse to the company increases, the stock transported will reduce and when the cost reduces, the stock transported will increase making the company to sell more. When the transportation of stock bought by the customers is catered for to their destination, customers will buy more from the company. As seen in with the amazon company’s activities, the company is always strategized to ensure very reliable in inventory transportations costs since it tries to reduce some unnecessary frauds in the company (Viscusi, 1992).

The third trade-off that will follow in this entire discussion while targeting Amazon Company is Lead-time transportation cost. This is the cost of time between the initial start of the process and the end of the manufacturing process. When the transportation cost is high the manufacturing process will stall hence causing the entire process in the company to delay, this will hence cause the customers to be scared and lack trust on the services offered by the company. And if the transportation cost is reduced, the entire production process will be fast hence encouraging the customers and attracting the customers to the services. Take example of this at Amazon Company; when the customers gain trust to the services offered they make huge transaction sin the company increasing the sales in the Amazon Company. The Amazon Company should reduce the lead time transportation cost to make the production activities fast and increasing the flow of products and items to the company.

The fourth and the last trade-off to be talked about is Product Variety-Inventory. This is the ability of having a wide variety of products in the business making the choice of customers to be wide. When the business or company offers a wide variety of products to the customers, the choice of the customers to buy the products will increase making the business to sell more of the products. Similarly when the business offers less variety of products to the customers, the choice of customers to the products will reduce hence reducing the sales of the company or business. Therefore, this has been a challenge to most companies including Amazon Company hence great efforts have put in place to curb this situation and it has been in progress for a while and recently it was reported the situation was almost to be arrested (Schwab, 1994).

b. Discuss three to four methods of coping with the bullwhip effect from the following list and give an example of each in relationship to the chosen company:

The following coping methods are very vital as far as business is concern. The first method is that of reducing uncertainty. This is the act of making customers to feel certain of the services offered to them. When the customers become uncertain of the services offered in the company, their demand for the services will reduce making the company to sell less. As seen with most of the companies in the world, the amazon company should make all its customers certain of the services offered.

The second method is that of reducing variability.Variability is the way the sales may be changing in the company depending on the number and type of the customers visiting the business. The business should reduce this act by ensuring that it satisfies its customers to make them visit the company frequently increasing the number of sales it makes in a day. When the customers visit the business rarely because of the services the business offers to them, the business will be operating at a loss. The Amazon Company should reduce all forms of variability from the customers towards the business to ensure that the customers demand always lies in its products (Schwab, 1994).

The third coping method used is that lead time reduction. Lead time reduction is ability to reduce the initial time and the completion time of a production process. The company should reduce the lead time to make production faster and increasing sales in the company. When the lead time becomes long, the customers might find small range of products in the business discouraging and scaring them away from the company. In this case the company will make loss.

The fourth and the last method to be discussed as far as the paper requirement is concerned is that of strategic partnerships. The way of choosing partners to a company or business in the way which enables the communication or plans to flow well. The company should partner with other companies which can enable the exchange of information to be fast and well. If the company partners with others and cannot communicate well, the decision making process will be slow hence affecting the activities in the company. When the decision making process is fast in the company, the flow of activities in that company is smooth and fast too hence encouraging the customers and gaining trust from the customers of the products offered by the Amazon company (Carranza & Villegas, 2006).

References

Carranza, T. O. A., & Villegas, M. F. A. (2006). The bullwhip effect in supply chains: A review of methods, components, and cases. New York: Palgrave Macmillan.

Schwab, S. C. (1994). Trade-offs: Negotiating the Omnibus Trade and Competitiveness Act. Boston, Mass: Harvard Business School Press.

Steve, O. (2012). 5 Ways To Control Costs. Retrieved on June 22, 2015 from: