What describes a push model in the supply chain?

What describes a push model in the supply chain?

• A. Production based on actual customer demand.
• B. Production is driven by orders received from customers.
• C. Production based on forecasted demand.
• D. Production is adjusted only after stockouts occur.

Answer: (C)

A push model in the supply chain is when production is driven by forecasted demand rather than actual orders. Firms forecast future sales and produce accordingly, pushing goods through the supply chain toward distribution or retail and often holding inventory at various stages. This approach leverages planned production and economies of scale, but it can lead to excess inventory if forecasts are off or to stockouts if demand is higher than expected. In contrast, producing in response to actual customer demand (pull) or reacting after stockouts do not define a push system. Therefore, production based on forecasted demand best describes a push model.

A push model in the supply chain is when production is driven by forecasted demand rather than actual orders. Firms forecast future sales and produce accordingly, pushing goods through the supply chain toward distribution or retail and often holding inventory at various stages. This approach leverages planned production and economies of scale, but it can lead to excess inventory if forecasts are off or to stockouts if demand is higher than expected. In contrast, producing in response to actual customer demand (pull) or reacting after stockouts do not define a push system. Therefore, production based on forecasted demand best describes a push model.