Determining the minimum inventory level for a new item requires understanding its consumption rate, which indicates how quickly the item is used or sold. This information is critical for setting appropriate inventory levels to ensure availability while minimizing excess stock. By analyzing the consumption rate, businesses can better forecast demand, set reorder points, and maintain optimal inventory levels to support the new business without overstocking.
References:
* Vollmann, T.E., Berry, W.L., Whybark, D.C., & Jacobs, F.R. (2005). Manufacturing Planning and Control for Supply Chain Management. McGraw-Hill.
* Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation.
Pearson.

When designing a supply chain for strategic advantage, the first consideration should be matching the supply chain to the product type. Different products have different requirements in terms of production, distribution, and inventory management. For instance, functional products with predictable demand benefit from efficient supply chains focused on cost minimization, while innovative products with uncertain demand require responsive supply chains that emphasize flexibility and speed.
References
* Fisher, M. L. (1997). What is the right supply chain for your product? Harvard Business Review, 75(2),
105-116.
* Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation.
Pearson.