episode 05 exercise 02

Part 2

Warren presented three different alternatives for dealing with supply chain uncertainties. They are: to utilize vertical integration, carry more inventory, and form better relationships with suppliers. To which alternative does each of the following risks and benefits apply?

1.	Large capital risk.


2.	Possibility of obsolete or unsellable inventory.


3.	Reduced cash flow from inventory investments.


4.	Risk of a partner's business failure.


5.	Possible antitrust scrutiny from the government.


6.	Potential for a partner to become a competitor.

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