Question

Read the statement below and answer the questions that follow: Balancing supply and demand is concerned with the time between manufacturing (supply) and consumption, the different stages within the supply chain, and the variation in consumer demand. There are four (4) methods that can be used to manage supply and demand imbalances, broken down into two categories, namely: (1) internal balancing methods and (2) external balancing methods. Meyer, A. Schutte, P. Wheeler, B. Kufandarerwa, R. Makiwa, P. Cawthra, T. Ruziwa, R. RourkeMcGill. Nokhepheyi, Y. Zandberg, E. 2020. Principles of Stock Control and Inventory Management. First Edition. Westlake Business Park, Cape Town: Edge Learning Media. Required: Using your own words, you are required to distinguish between the purpose of internal and external balancing methods in managing supply and demand imbalances.

Answer 1

Internal balancing methods adjust a company's internal processes to align supply with demand, such as inventory management and production scheduling. External balancing methods influence demand to match supply, for example through marketing campaigns or outsourcing production.

Step-by-step explanation:

Internal vs External Balancing Methods

Managing supply and demand imbalances is crucial in any business to ensure that the production of goods matches consumer needs while maintaining operational efficiency. The purpose of internal balancing methods is to adjust the company's internal processes to align supply with demand. This can involve strategies such as inventory management, production scheduling, and capacity planning. On the other hand, external balancing methods are focused on influencing the demand to match the supply. This could include marketing campaigns to boost demand during low seasons or outsourcing production to meet unexpected increases in demand.

The distinction between these methods lies in their approach; internal methods are about optimizing what the company can control within its operations, while external methods involve interacting with market forces and external stakeholders to balance supply and demand.