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Which basic production strategy will build inventory and avoid the costs of excess capacity

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11y ago

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What are the functions of wealth management?

Wealth management equals to Wealth Review and Investment Strategy, Financial Planning, Goal Driven Investing, Risk Management & insurance Planning, Property Purchase & Financing Wealth Planning etc.


What is inventory draw down?

Inventory draw down refers to the process of reducing the amount of inventory a company holds, often by selling off existing stock rather than replenishing it. This strategy can be employed to improve cash flow, reduce storage costs, or respond to changes in demand. It may also occur when a business is winding down operations or transitioning to a different product line. Effective inventory draw down management can help minimize waste and optimize overall inventory levels.


Should company store large amounts of inventory to eliminate shortages or stock outs?

While maintaining large amounts of inventory can help prevent shortages and stockouts, it also ties up capital and increases storage costs. Companies must balance the risk of stockouts with the costs associated with excess inventory. Implementing efficient inventory management practices, such as demand forecasting and just-in-time strategies, can help optimize stock levels without the need for excessive inventory. Ultimately, the decision should align with the company’s overall strategy and market dynamics.


Why is it advisable to start with sales the production and capital expenditure forecast in the budgeting process?

Starting with sales forecasts in the budgeting process is advisable because it provides a foundation for estimating revenue, which is crucial for determining the financial feasibility of the budget. Additionally, sales forecasts can drive production forecasts, helping to align production capacity with expected demand. Capital expenditure forecasts should follow sales and production forecasts to ensure that investments are made strategically to support the anticipated sales and production levels. This sequential approach ensures that the budget is realistic and well-aligned with the overall business strategy.


What kind of businesses use FIFO?

If inventory goods are perishable, then FIFO is the best method because older goods need to be sold before newer goods. Some companies use LIFO because this strategy means less taxable income (assuming that prices are increasing). Regardless, whatever strategy a business uses for statements it must also use that strategy for income tax preparation.

Related Questions

What has the author George W Plossl written?

George W. Plossl has written: 'Getting the most from forecasts' 'The master production schedule' 'The role of top management in the control of inventory' -- subject(s): Industrial management, Inventory control 'The best investment-control, not machinery' 'Effective corporate strategy in manufacturing' -- subject(s): Production management 'Material requirements planning and inventory record accuracy' 'Material requirements planning by computer' -- subject(s): Data processing, Inventory control, Material requirements planning, Production control


What is capacity and inventory trade off?

To meet customer demand there are two extreme strategies:1. Have high enough capacity to meet peak customer demands (high equipment costs and high base labor costs) and produce goods as the orders come in (zero inventory costs). A shop selling ice cream cones would favor this strategy since orders are small and fast to make and inventory would be costly to keep.2. Have only enough capacity to meet average customer demand levels (lower capacity costs) and keep enough inventory to meet peak demand needs (maximum inventory costs). A brick factory might follow this strategy because orders are occasional but large and production time is long.In any specific instance, capacity and inventory level strategies may fall somewhere between these two extremes.


Why is an undifferentiated marketing strategy good?

The benefit of an undifferentiated strategy is that it is cost-effective because a narrow product focus results in lower production, inventory, and transportation costs


What is J.I.T inventory?

J.I.T inventory stands for Just-In-Time inventory management, a strategy where products are delivered to a company right when they are needed for production or sale. This approach minimizes inventory carrying costs and reduces waste by having inventory arrive "just in time" to meet demand.


What is production strategy?

What is production strategy?


What is the terms strategy and tactic in production?

Tactical plans are usually developed in the areas of production, marketing, ... Because strategic planning focuses on the long term and tactical.


What is the advantage of Lead Strategy in regards to Capacity?

Capacity Planning is a proactive approach to determining how much capacity a company should maintain in lieu of anticipated market demand. Lead Strategy is the concept of increasing capacity in anticipation of an increase in demand. The advantage of lead strategy is an offensive advantage. It places the organization in the correct position to capture market share by fueling increased purchases. Often times aggressive corporate governance is well supported by a lead strategy with production and capacity. The downside to this particular strategy is the fallout of a failed market grab. Any marketing push, price drop to fuel market growth, or new product release can fail. In the event of a lead strategy there is a larger risk involved on the part of the manufacturer should the demand not meet the supply.


Difference between strategy and planning?

In business, strategy is abstract while planning is more concrete. A strategy describes a global path to achieve a goal. Planning on the other hand, is the allocation of resources necessary to accomplish the strategy.


What is relationship between strategy and planning?

planning strateging


What is the relationship between planning and strategy?

planning strateging


What are the differences between planning strategy and business policy?

that strategy is long term and planning could be a short term.


Evaluate the current business strategy of 99 Cents Only Stores in response to its competitive environment. What is the role of information technology infrastructure in that strategy?

99 cents store only the use of information technology. Assist with inventory. Planning to expand. And the displacement distribution. Effective and rapid growth.