Practice Quiz

Supply Chain Manager Exam Prep

Category - Demand

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Let's suppose that Green Gardening Tools applies another approach to meet demand in which it builds up inventory during the off-season to keep production stable year round. What would be the advantage and the disadvantage of this approach?

  1. Smaller inventory; higher profits
  2. Smaller, less expensive factory; fewer promotions
  3. Smaller less expensive factory; higher inventory carrying costs
  4. Larger profits, smaller labor force
Explanation

Answer: C - If Green Gardening Tools applies the approach of building up inventory during the off-season to keep production stable year round they would be able to have a smaller, less expensive factory. However with high inventory carrying costs the disadvantage of the approach is that it has higher inventory carrying costs.

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