MGT 3501 Lecture 15: MGT 3501 - Lecture 15.2
Document Summary
One of the most important decisions operations has to make is how to handle variation in demand. You know it will happen (no demand is perfectly constant, or is in perfect alignment with the forecast) How do you handle a lower demand? (if demand is lower than forecasted) Can you switch to complementary products quickly. There might be companies out there who can produce products for the firm. When variability does creep in, and you"re maxed out with utilization, causes a lot more problems. Match demand by hiring and laying off employees as necessary. Requires access to large pool of available resources who require little training. Employees know that if demand goes down, they might be the next employee to get laid off. Match demand by varying the work hours of employees. No inventory buildup, no hiring, no termination. Keep the same amount of employees but vary their hours. If demand goes down, their hours will be cut.
