2.

d. change in demand that has been scheduled. e. all of the above Answer: a

Difficulty: Easy

Which of the following is not a problem caused by products experiencing predictable variability of demand?

a. high levels of stockouts during peak demand

b. high levels of excess inventory during periods of low demand c. increased responsiveness of the supply chain d. increased costs in the supply chain

e. decreased responsiveness of the supply chain Answer: c

Difficulty: Easy

A firm can handle predictable variability by managing a. supply using capacity, inventory, trade promotions, and backlogs. b. supply using capacity, inventory, subcontracting, and backlogs. c. demand using short-term price discounts and trade promotions. d. a and c only e. b and c only Answer: e

Difficulty: Easy

Seasonal demand can be met by a. maintaining enough manufacturing capacity to meet demand in any

period.

b. building up inventory during the off season to meet demand during peak

seasons.

c. offering a price promotion during periods of low demand to shift some of

the demand into a slow period.

d. all of the above e. a and b only Answer: d

Difficulty: Moderate

The advantage of maintaining enough manufacturing capacity to meet demand in any period is a. very low inventory costs because inventory needs to be carried from

period to period.

b. very low inventory costs because no inventory needs to be carried from

period to period.

c. very high inventory costs because no inventory needs to be carried from

period to period.

d. very high inventory costs because expensive capacity would go unused

during most months when demand was lower.

e. none of the above Answer: b

Difficulty: Moderate

3.

4.

5.

6.

7.

The disadvantage of maintaining enough manufacturing capacity to meet demand in any period is a. much of the expensive capacity would go unused during most months

when demand was lower.

b. the expensive capacity would be used consistently throughout the year. c. most of the expensive capacity would still be used during most months

when demand was lower.

d. very low inventory costs because no inventory needs to be carried from

period to period.

e. None of the above are true. Answer: a

Difficulty: Moderate

The advantage of building up inventory during the off season to meet demand during peak seasons and keep production stable year round is a. very low inventory costs because no inventory needs to be carried from

period to period.

b. much of the expensive capacity would go unused during most months

when demand was lower.

c. in the fact that a firm could get by with a smaller, less expensive factory. d. in the fact that a firm could get by with a larger, more expensive factory. e. None of the above are true. Answer: c

Difficulty: Moderate

The disadvantage of building up inventory during the off season to meet demand during peak seasons and keep production stable year round is

a. very low inventory costs because no inventory needs to be carried from

period to period.

b. very high inventory costs because inventory needs to be carried from period

to period.

c. in the fact that a firm could get by with a smaller, less expensive factory. d. in the fact that a firm could get by with a larger, more expensive factory. e. None of the above are true. Answer: b

Difficulty: Moderate

The advantage of offering a price promotion during periods of low demand to shift some of the demand into a slow period is a. a demand pattern that is less expensive to supply. b. very high inventory costs because inventory needs to be carried from

period to period.

c. in the fact that a firm could get by with a smaller, more expensive factory. d. much of the expensive capacity would go unused during most months

when demand was lower.

e. all of the above Answer: a

Difficulty: Moderate

Companies typically divide the task of supply and demand so that a. Marketing manages demand and Operations manages supply.

8.

9.

10.

b. Marketing manages supply and Operations manages demand. c. Marketing manages demand and supply. d. Operations manages demand and supply. e. none of the above Answer: a

Difficulty: Easy

11.

With supply and demand management decisions being made independently, a. it is increasingly difficult to coordinate the supply chain, thereby

increasing profit.

b. it is increasingly difficult to coordinate the supply chain, thereby

decreasing profit.

c. it is easier to coordinate the supply chain, thereby decreasing profit. d. it is easier to coordinate the supply chain, thereby increasing profit. e. none of the above Answer: b

Difficulty: Moderate

A firm can vary supply of product by controlling a. production capacity and inventory. b. production capacity and price promotions. c. price promotions and inventory. d. production capacity and inventory promotions. e. none of the above Answer: a

Difficulty: Moderate

Which of the following is not an approach that firms can use when managing capacity to meet predictable demand variability? a. time flexibility from workforce b. use of seasonal workforce c. use of subcontracting d. use of dual facilities—dedicated and flexible e. using common components across multiple products Answer: e

Difficulty: Easy

The capacity management approach that uses flexible work hours from the workforce to manage capacity to better meet demand is a. time flexibility from workforce. b. use of seasonal workforce. c. use of subcontracting.

d. use of dual facilities—dedicated and flexible.

e. designing product flexibility into the production processes. Answer: a

Difficulty: Moderate

The capacity management approach that uses a temporary workforce during the peak season to increase capacity to match demand is a. time flexibility from workforce. b. the use of seasonal workforce.

12.

13.

14.

15.

c. the use of subcontracting.

d. the use of dual facilities—dedicated and flexible.

e. designing product flexibility into the production processes. Answer: b

Difficulty: Easy

16.

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

a. time flexibility from workforce. b. the use of seasonal workforce. c. the use of subcontracting.

d. the use of dual facilities—dedicated and flexible.

e. designing product flexibility into the production processes. Answer: c

Difficulty: Moderate

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

a. time flexibility from workforce. b. the use of seasonal workforce. c. the use of subcontracting.

d. the use of dual facilities—dedicated and flexible.

e. designing product flexibility into the production processes. Answer: d

Difficulty: Easy

The capacity management approach where a firm has production lines whose production rate can easily be varied to match demand is a. time flexibility from workforce. b. the use of seasonal workforce. c. the use of subcontracting.

d. the use of dual facilities—dedicated and flexible.

e. designing product flexibility into the production processes. Answer: e

Difficulty: Moderate

Which approach to capacity management may be hard to sustain if the labor market is tight?

a. time flexibility from workforce b. use of seasonal workforce c. use of subcontracting

d. use of dual facilities—dedicated and flexible

e. designing product flexibility into the production processes Answer: b

Difficulty: Moderate

Which approach to capacity management makes use of spare plant capacity that exists in the form of hours when the plant is not operational?

17.

18.

19.

20.