Question :
When should a product be "Restricted" or "Allocated"?
 
Answer :
Generally there are two scenarios whereby a product is a proper candidate for "restricted" sales/purchasing management. Each scenario is relevant because each focuses on situations where demand exceeds supply. Furthermore, each scenario requires a distribution tool that can then spread finite inventories, in a fair manner, amongst the broadest base of customers equally or proportionately.


(1) Historic demand exceeds supply and there is a risk that one or several customers will purchase all/enough inventory to prevent a fair pattern of distribution among customers; or


(2) The suppliers have knowledge that there will only be a single shipment of the item(s) into the local market. If the in-bound quantity is deemed to be sufficiently limited compared to expected demand, then equitable allocations to the broader customer base are recommended.



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