ENTREPRENEURIAL OPERATIONS
PRODUCTION PLANNING AND CONTROL
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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characteristics of level strategy
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results in high levels of inventory
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negative effect on workforce morale
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expensive if cost of varying capacity is high
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none above
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Explanation:
Detailed explanation-1: -2. Excess inventory represents a loss of revenue. Excess merchandise loses value the longer it is held in stock, as the demand for that product diminishes, and it takes “shelf space” away from a newer product with perhaps a higher profit margin.
Detailed explanation-2: -The use of a level strategy means that a company will produce at a constant rate regardless of the demand level. In companies that produce to stock, this means that finished goods inventory levels will grow during low demand periods and decrease during high demand periods.
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