What is the advantage of building up inventory during the off season to meet demand during peak seasons and keep production stable year round?
Understand the Problem
The question asks about the advantages of building up inventory during the off-season to meet peak season demand while maintaining stable year-round production. It presents four options, and we need to identify the one that best describes a benefit of this strategy.
Answer
A firm could get by with a smaller, less expensive factory.
The advantage of building up inventory during the off season to meet demand during peak seasons and keep production stable year round is that a firm could get by with a smaller, less expensive factory.
Answer for screen readers
The advantage of building up inventory during the off season to meet demand during peak seasons and keep production stable year round is that a firm could get by with a smaller, less expensive factory.
More Information
Building up inventory during the off-season helps to stabilize production year-round and ensures that there is enough stock to meet increased demand during peak seasons. This strategy can lead to more efficient use of production capacity and potentially reduce costs associated with scaling production up and down rapidly.
Tips
Managing inventory costs and accurately predicting seasonal demand are critical to avoid stockouts or excess inventory.
Sources
- Chapter 9 Flashcards by Amy Horton - Brainscape - brainscape.com
- Solved The advantage of building up inventory during the off - Chegg - chegg.com
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