If a Make-To-Stock Manufacturing Firm with Highly Seasonal Demand Follows

question 27

Multiple Choice

If a make-to-stock manufacturing firm with highly seasonal demand follows a level production strategy,which of the following is likely to be true?

• A)Inventory will fluctuate significantly during the year.
• B)The production rate must be set equal to the demand in the heaviest demand period,and stay at that level all year.
• C)It will be difficult to keep the workforce size stable.
• D)The firm must make sure that its maximum capacity is at least as high as the heaviest demand period.

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Definitions:

Government Quota

A limit set by a government on the amount or value of a good that can be imported or exported over a specified period.

Supply Price

The price of a given quantity at which producers will supply that quantity.

Quota Limit

The total amount of a good under a quota or quantity control that can be legally transacted.

Demand Price

The price at which consumers are willing to buy a specific quantity of a good or service.