Demand Segmentation Definition November 29, 2006
Posted by Lawrence Loucka in : Definitions, Lean, Supply Chain , trackbackA graphical representation of the sales/consumption volume of products vs. demand variability. High volume low demand variability products are treated differently than low volume high demand variability. This technique is more informative than ABC or P-Q.
Source: Blair R. Williams, Manufacturing for survival: the how to guide for practitioners and managers (Reading Massachusetts: Addison-Wesley), 1996, pp 281 - 286.
Demand Variation is measure of the volatility of sales in the market place. Can be expressed as either:
- Standard deviation of the demand over time divided by the mean (Coefficient of Variation Cv), or
- the ratio of: the peak to base demand divided by the average demand , or
- the ratio of: the average demand to 6 sigma
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