Question

Plan C involves a level strategy that produces 1,200 cases per quarter, meeting the forecast demand with inventory and subcontracting. What is a potential advantage of Plan C?

a) Minimized inventory holding costs.
b) Increased production flexibility.
c) Lower subcontracting expenses.
d) Higher responsiveness to demand fluctuations.
e) Reduced lead times.

Answer 1

The potential advantage of Plan C is minimized inventory holding costs.

Step-by-step explanation:

The potential advantage of Plan C, which involves a level strategy that produces 1,200 cases per quarter, meeting the forecast demand with inventory and subcontracting, is minimized inventory holding costs. By producing a consistent amount that meets the demand, the company can reduce the need for excess inventory and the associated costs of storing and managing it. This can lead to cost savings and improved efficiency.