8.3. Strategies for Coping with Demand Fluctuations

Try these first

1. 1.

   Define demand fluctuation in your own words.

   Hint

   Think about how demand might change throughout the year.

2. 2.

   What is one downside of using overtime production?

   Hint

   Consider what happens to worker pay.

3. 3.

   What is a key cost associated with overtime production?

   • A. Reduced quality of products
   • B. Increased labor costs
   • C. Higher material costs

   Hint

   Think about how salaries change during overtime.

4. 4.

   True or False: Adjusting workforce size has no costs associated with it.

   • True
   • False

   Hint

   Consider the costs related to each workforce adjustment.

5. 5.

   Given a demand of 700 carpets in October but a production capacity of only 600, how would you recommend managing this situation? Consider overtime, hiring and firing costs.

   Hint

   Analyze the costs of both options compared to expected revenues.

6. 6.

   Create an optimal production plan using linear programming for a year, factoring in seasonal demands varying from 440 to 920 carpets. Include costs for overtime and storage.

   Hint

   Consider how monthly demand and production capacity will affect your model.