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how would the threat of immediate product obsolescence affect imeg rsquo s practices 646265

(Inventory cost management; writing) IMeg manufactures various electronic assemblies that are sold primarily to computer manufacturers. IMeg’s reputation has been built on quality, timely delivery, and products that are consistently on the cutting edge of technology. IMeg’s typical product has a short life; products are in development for about a year and in the growth stage, with sometimes spectacular growth, for about a year. Each product then experiences a rapid decline in sales as new products become available.

IMeg’s competitive strategy requires a reliable stream of new products to be developed each year, which is the only way that the company can overcome the threat of product obsolescence. IMeg’s products go through the first half of the product life cycle similar to products in other industries; however, differences occur in the second half of the products’ life cycles. IMeg’s products never reach the mature product or declining product stage. Near the end of the growth stage, products just “die” as new ones are introduced.

a. In the competitive market facing IMeg, what would be key considerations in production and inventory control?

b. How would the threat of immediate product obsolescence affect IMeg’s practices in purchasing product components and materials?

c. How would the threat of product obsolescence affect the inventory carrying costs for a typical product produced by IMeg?

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