PROCTER & GAMBLE TRIES TO OPTIMIZE INVENTORY1. Why are larger supply chains more difficult to manage? List several reasons.1. It involves thousands of suppliers, manufacturing facilities and markets. Even the slightest of changes at any part of the supply chain has significant effects on all of the other participants.2. Inventory optimization, which is critical in cutting costs and increasing revenue, involves allthe branches of the chain. The larger the supply chain, the more branches are involved. Themore branches that are involved, the chance for any errors or inefficiencies to occur with in thesupply chain is high. 2. Why is supply chain management so important at a company such as P&G?P&G’s research has shown that retailers lose 11% of sales due to out-of-stocks, and that same-brand substitutions win back less than 25% of those lost sales for a manufacturer. The objectiveof the supply chain management therefore is to ensure that shelf inventory would not be zero atany given time in order not to experience these loses.3. How did inventory optimization impact operations and decision making at P&G?In P&G’s vision of the consumer-driven supply network (CSDN), daily demand updates providetimely warning of changes in product consumption. To make the CDSN work, this informationmust then be rapidly integrated into replenishment plans, which would then involve all partnersand suppliers in the supply chain.4. Why wouldn’t a small company derive much benefit from multi-echelon inventory optimizationas a large company? Explain your answer.Multi echelon and Inventory Optimization are in fact two separate technologies, but they aretypically bundled together in MEIO applications. Multi echelon planning answers the question”where” inventory should be located, and inventory optimization answers the question “how”much should be maintained in order to meet a certain service level target.While small and large company would both benefit from Inventory Optimization, Multi echelon isless applicable to small companies most especially if it has only few suppliers, wherein the“where” can be obviously answered without even processing the array of information.