REPLY Meaning of Stock/Level (SD6892)

[SDMAIL Galan, Ricardo]

Posted by  "Galan, Ricardo" <RICARDO.GALAN at saic.com>

Alan,

I define stocks as a representation of the accumulation of any amount.
If you could stop time, you will only be able to measure the quantities
in stocks. In the classic bathtub model, the stock is the level of
water. If you stop time, you will be able to measure the amount of water
in the bathtub, but not the flow of water from the faucet or out trough
the drain. Similarly, when looking at soft variables like "customer
satisfaction" or "brand loyalty", you can stop time and know what the
levels for these variables are. Many companies keep track of these
levels, and know what they are at any particular point in time. These
need to be accumulated separately, since they are independent of many
other variables that should be used for calculating expected sales.

Also, it might take some time to change the actual level of soft
variables like "customer satisfaction" or "brand loyalty". A change in
product quality might change brand loyalty, but just by a small amount
if the change in quality is sustained for a small amount of time.
Therefore, if the company makes fixes problems with product quality
quickly, they will not see much of a difference in the brand loyalty
that the have accumulated.


_______________________________________________

Ricardo Galan
Science Applications International Corporation
1710 SAIC Drive | MS 2-6-9 | McLean, VA 22102 
Posted by  "Galan, Ricardo" <RICARDO.GALAN at saic.com>
posting date  Wed, 9 Apr 2008 13:40:56 -0400