Channel stuffing, or any other form of overloading usually need multiple level of distributors to "absorb" the influx in short term, and would hide well when it's fad products, where the expected future sales number are always overly optimistic. And usually it's more of a miscalculation in the organization, than an intentional malpractice.infoscott wrote:In the real world there is a limited form of Cook Book known as Channel Stuffing. The manufacturer (factory) will oversell product to the distributors (warehouse) in order to make their sales quotas. If the retail market (retail firm) can not sell enough of the product to the end user, then either the manufacturer has to cut back on sales in the next reporting period, and/or the distributor returns a lot of the unsold product. The price fixing usually comes in terms of discount incentives to the distributors to take product off the manufacturer's hands.
When I worked in computer product distribution back in the 1990s, channel stuffing was a big deal. I'm sure even today there are supply chains for which channel stuffing is a periodic problem.
Interestingly enough, players could actually implement or observe this kind of behavior in Capitalism game. A lot of time if retailer and manufacturer are different corporations, the AI retailers will try to link a source when it's rating is favorable, but a lot of the time the manufacturing AI can't keep up with the initial AI retail demand, so it would aggressively increase its price. And the retailer AI will then drop the link to the over-priced products. Sometimes retailer AI would even write-off the existing stockpiled purchasing and sales units for new pairs, and repeat the cycle if the product rating rise again from the manufacturers due to no purchase. I've observe this phenomena many times, when I merger retailer AIs, and often there are discount stores selling one product with multiple brands, and their linking are all disconnected. And if you put this discount store to be managed by COO AI, sometimes it will repeat the same pattern of behavior as well, if you allow it to change suppliers.
Human players can even exploit this AI retail behavior by creating excessive supply with cheap wholesale price in warehouses or factories. After many retail AIs are hooked, immediately increase the price to insane level to get a huge profit within a month. Before the retailer can disconnect their links, delete player-side output unit manually, go to the downstream AIs to see if they renew the sales units. If they are free again, repeat the process again. As long as the timing is right when there are no-stock in sales units, the extra cost would be just the rebuilding sales-unit expense. Obviously it would take a lot of micro-managing, but actually could give players a big income boost (This is like a mirror exploit of artificially creating shortage by faking excessive supply).