Post a significant responses to the following situation Don\'s Lumber Company on
ID: 343035 • Letter: P
Question
Post a significant responses to the following situation
Don's Lumber Company on the Hudson River feature a large selection of materials for flooring, decks, moldings, windows, siding, and roofing. The prices of lumber and other building materials are constantly changing. When a customer asks about the price on pre-finished wood flooring, sales representatives consult a manual price sheet and then call the supplier for the most recent price. The supplier in turn uses a manual price sheet, which has been updated each day. Often, the supplier must call back Don's sales reps because the company does not have the newest pricing information immediately on hand.
1. Assess the business impact of this situation.
2. Describe how this process could be improved with information technology.
3. Identify the decisions that would have to be made to implement a solution.
Explanation / Answer
Ans:-
1. Since the sales representative doesn't have the updated data it can impact the correct communication to the customer. The supplier uses daily updated sheet to refer pricing. It might be possible that customer wants to make a purchase at a later date and he might make a perception on pricing as fixed pricing. The fluctuating lumber price can eat out margin and impact profitability.
2. Various resources can be used with the help of internet. There can be one standard rate as per indurstry average which can be communicated to all suppliers and retailers. The same data would be available to everyone in the industry. The same concept is followed on commodity exchanges.
3. There are different solutions to it like:-
a. Include a part in cost to deal with price fluctuation. This would act as insurance if price fall suddenly.
b. Customers should be informed about the volatility and they should be ready to make a purchase as per current rate.
c. The copmany should keep adequate inventory to deal with fluctuation of demand.