Chapter 9 Flashcards
Predictable variability is
change in demand that can be forecasted.
Which of the following is a problem caused by products experiencing predictable variability of demand?
- High levels of stockouts during peak demand
- high levels of excess inventory during periods of low demand
- Increased costs in the supply chain
- Decreased responsiveness of the supply chain
A firm can handle predictable variability by managing
supply using capacity, inventory, subcontracting, and backlogs.
and
demand using short-term price discounts and trade promotions.
Seasonal demand can be met by
- maintaining enough manufacturing capacity to meet demand in any period.
- building up inventory during the off season to meet demand during peak seasons.
- offering a price promotion during periods of low demand to shift some of the demand into a slow period.
The advantage of maintaining enough manufacturing capacity to meet demand in any period is
very low inventory costs because no inventory needs to be carried from period to period.
The disadvantage of maintaining enough manufacturing capacity to meet demand in any period is
much of the expensive capacity would go unused during most months when demand was lower.
The advantage of building up inventory during the off season to meet demand during peak seasons and keep production stable year round is
in the fact that a firm could get by with a smaller, less expensive factory.
The disadvantage of building up inventory during the off season to meet demand during peak seasons and keep production stable year round is
very high inventory costs because inventory needs to be carried from period to period.
The advantage of offering a price promotion during periods of low demand to shift some of the demand into a slow period is
a demand pattern that is less expensive to supply.
Companies typically divide the task of supply and demand so that
Marketing manages demand and Operations manages supply.
A firm can vary supply of product by controlling
production capacity and inventory.
Which of the following is an approach that firms can use when managing capacity to meet predictable demand variability?
- Time flexibility from workforce
- Use of seasonal workforce
- Use of subcontracting
- Use of dual facilities–dedicated and flexible
The capacity management approach that uses flexible work hours from the workforce to manage capacity to better meet demand is
time flexibility from workforce.
the capacity management approach that uses a temporary workforce during the peak season to increase capacity to match demand is
the use of seasonal workforce.
The capacity management approach where a firm purchases peak production from another firm so that internal production remains level and can be done cheaply is
the use of subcontracting.
The capacity management approach where a firm builds facilities to produce a relatively stable output of products over time in a very efficient manner and facilities to produce a widely varying volume and variety of products, but at a higher unit cost is
the use of dual facilities–dedicated and flexible.
The capacity management approach where a firm has production lines whose production rate can easily be varied to match demand is
designing product flexibility into the production processes.
19) Which approach to capacity management may be hard to sustain if the labor market is tight?
Use of seasonal workforce
Which approach to capacity management makes use of spare plant capacity that exists in the form of hours when the plant is not operational?
Time flexibility from workforce
Which approach to capacity management makes use of overtime, which is varied to match the variation in demand?
Time flexibility from workforce
Which approach to capacity management would schedule the workforce so that the available capacity better matches demand?
Time flexibility from workforce
Which approach to capacity management would use a part-time workforce to increase capacity flexibility by enabling the firm to have more people at work during peak periods?
Time flexibility from workforce
The key to which capacity management approach would involve having both volume (fluctuating demand from a manufacturer) and variety flexibility (demand from several manufacturers) to be sustainable?
Use of subcontracting
Which approach to capacity management would require that the workforce be multi-skilled and easily adapt to being moved from line to line?
Designing product flexibility into the production processes
Which approach to capacity management would use production machinery that can be changed easily from producing one product to another?
Designing product flexibility into the production processes
which approach to capacity management would only be effective if the overall demand across all the products is relatively constant?
Designing product flexibility into the production processes
Which of the following is an approach that firms can use when managing inventory to meet predictable demand variability?
Using common components across multiple products
When most of the products a firm produces have the same peak demand season, in order to meet predictable variability with inventory, it must
build inventory of high demand or predictable demand products.
Supply chains can influence demand by using
pricing and other promotions.
The pricing and promotion decisions are often made by
marketing and sales.
The promotion and pricing decisions made by marketing and sales typically have the objective of
maximizing revenue.
Pricing decisions based only on revenue considerations often result in
a decrease in overall profitability.
When planning, the goal of all firms in the supply chain should be to maximize supply chain profits because
this leaves them more profit to divide among themselves.
An increase in consumption of the product either from new or existing customers is
market growth.
Customers substituting the firm’s product for a competitor’s product is
stealing share.
Customers moving up future purchases to the present is
forward buying.
In general, as the fraction of increased demand coming from forward buying grows, offering the promotion during the peak demand period becomes
less attractive.
Offering a promotion during a peak period that has significant forward buying
creates a demand pattern even more costly to serve.
Average inventory
increases if a promotion is run during the off-peak period.
Promoting during a peak demand month may decrease overall profitability if
a significant fraction of the demand increase results from a forward buy.
As the product margin declines, promoting during the peak demand period becomes
less profitable.
In this approach to managing capacity, a firm uses a temporary workforce during the peak season to increase capacity to match demand.
Use of seasonal workforce
Which of the following is a key factor influencing the timing of a product promotion?
- Cost of holding inventory
- Cost of changing the level of capacity
- Product margins
When a promotion is offered during a period, that period’s demand tends to go up. This increase in demand results from a combination of three factors. what are these three factors?
- Forward buying
- Stealing share
- Market growth
Which factor favors promotion during low-demand periods?
High forward buying
and
Low margin
Which factor favors promotion during peak-demand periods?
high ability to increase overall market
Four key factors influence the timing of a trade promotion:
-Impact of the promotion on demand
∙ Product margins
∙ Cost of holding inventory
∙ Cost of changing capacity
