The Right Way to Mix and Match Your Customers

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“The costs of demand variability can put you out of business.” That blunt assessment, recently offered to us by the director of sales and operations planning at a Fortune 500 company, reflects what managers already know: Peaks in demand can drive high overtime costs, stockouts, and lost sales, while slowdowns leave capacity idle and increase excess inventory. The impact on customer service levels — not to mention the bottom line — can be significant. But how can companies best manage this variability, especially when deciding which potential new customers to target?

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