6 in periods of excess capacity does it make sense for a manufacturing company to pr 4313374

6 in periods of excess capacity does it make sense for a manufacturing company to pr 4313374

6.In periods of excess capacity, does it make sense for a manufacturing company to produce some products to stock (i.e., build up inventory) for sale in future periods of high demand? Give two examples of industries where this might be a good idea. Give two examples where it might be a bad idea.

7.How does holding inventory help reduce the expected gap between available capacity and uncertain demand?

8.Inventory is one mechanism that a firm could use to protect itself from the impact of fluctuating demand. What are other long-term strategies a company could adopt to insulate itself against uncertain demand?

9.Often, the capacity of the most expensive machine defines a plant’s capacity. That is, firms will deliberately install excess capacity in “cheap” resources. Why might this practice be optimal?

10.The general allocation procedure in the text assumes few constraints on how we could use resources. Why might this general rule not hold when individual uses require a minimum amount of the resource? (For example, if we are allocating space, each use might need a minimum of 10 units of space.) How might we modify our approach to incorporate lumpy uses of capacity?

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