Difficulty: Easy

Average Score: 100%

A company that produces and sells ice cream prepares an aggregate plan for the next 16 months. In comparison to the production capacity at its plants, sales are high during the summer and low during the winter. The company does not outsource production.

Which strategy will prevent a shortage of supply during the summer season?

Rationale

Pre-produce the ice cream to build up stock.

By pre-producing ice cream, the company can accumulate inventory in anticipation of the high demand during the summer months, thus ensuring that supply meets customer needs without interruption.

A (Increase the product price to control product demand) YOUR ANSWER

While raising prices may decrease demand, it does not directly address the issue of supply shortages. This strategy might lead to customer dissatisfaction and loss of sales during peak season, as customers may turn to competitors for more affordable options.

B (Increase manpower to meet sales requirements) YOUR ANSWER

Although increasing manpower can help meet immediate sales demands, it does not provide a proactive solution to the anticipated summer demand. Hiring additional staff may take time and may not be effective if production capacity remains constrained.

C (Enhance in-house production capacity by adding more machines) YOUR ANSWER

While adding more machines could theoretically increase production capacity, this solution requires significant investment and time for installation and training. It may not be feasible to implement such changes quickly enough to meet the immediate demand spike expected in the summer.

D (Pre-produce the ice cream to build up stock) CORRECT

Pre-production allows the company to create a reserve of ice cream during the lower demand winter months, effectively ensuring that they have enough supply to meet the surge in sales during summer. This strategy is efficient and addresses the problem of supply shortages directly.

Conclusion

To effectively manage the anticipated high demand for ice cream during the summer months, pre-producing ice cream is the most effective strategy. It allows the company to build inventory during off-peak seasons, ensuring that there is sufficient supply when customer demand peaks. Other strategies may either react too slowly or fail to adequately address the need for increased supply in a timely manner.

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