When Future Demand Is Uncertain and Sequential Decisions Are Involved

question 15

Multiple Choice

When future demand is uncertain and sequential decisions are involved in capacity planning, a manager should use a:

• A) waiting line model.
• B) cash flow analysis.
• C) decision tree.
• D) gap analysis.

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Definitions:

Inventory Management

The process of ordering, storing, and using a company's inventory, including raw materials, components, and finished products.

Predictable Variability

Variations or changes in processes or systems that can be forecasted with a degree of reliability based on historical data.

Demand

The amount of a product or service that customers are willing and able to purchase at a given price in a specific market context.

Subcontracting Cost

Expenses incurred when a company contracts out work to external suppliers or vendors.