Cheap Custom Essay:How does holding inventory help reduce theexpected gap between available capacity and uncertain demand?
How does holding inventory help reduce theexpected gap between available capacity and uncertain demand?
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?
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?
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?
How does the notion of maximizing the contribution per unit of the scarce resource apply when some products have minimum production quantities?
Outsourcing is the practice of having an external party take over some business and/or manufacturing processes. How does outsourcing change a firm’s cost structure and, therefore, its ability to be nimble in responding to competition? What are some long-term costs and benefits of outsourcing?
Suppose that buying a component is estimated to save $50,000 annually over making it in-house. However, outsourcing the component means that 20 long-term employees would be laid off, adversely affecting employee morale. How might a manager trade off these two factors?
