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Capacity and inventory

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Operations managers have to decide where to manufacture different products, how much productive capacity their factories and plants should have, and how much inventory to maintain.
Read the sentences and classify them under the headlines choosing the best answer.

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Capacity and inventoryVersión en línea

Operations managers have to decide where to manufacture different products, how much productive capacity their factories and plants should have, and how much inventory to maintain. Read the sentences and classify them under the headlines choosing the best answer.

por Nenika Campos
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1.-A long lead time may allow competitors to enter the market

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2.- As production volume increases, you get economies of scale (the average fixed cost per unit produced decreases).

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3.- Finding enough workers and coordinating material flows can become difficult.

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4.- If lead time increases, some customers may go to other suppliers.

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5.- Lost sales and market share are usually permanent.

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6.- The working environment might get worse and industrial relations could deteriorate.

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7. There are costs of storage, handling, insurance, depreciation, the opportunity cost of capital, and so on.

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8.- You can be more flexible in product scheduling, and have longer lead times and lower cost operation through larger production runs with fewer set-ups.

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9.- There is always a risk of obsolescence, theft, breakage, and so on

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10.- You can meet variation in product demand.

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11.- You may be under-utilizing your workforce.

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12.- You have protection against variation in raw material delivery time (due to, shortages, strikes, lost orders, incorrect or defective shipments, etc)

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13.- You may be forced to produce additional, less profitable, products.

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14.- You can take advantage of quantity discounts in purchasing.

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15.- You may have to reduce prices to stimulate demand

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