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Which of the following capacity planning strategies is the least conservative?
See the explanation below.
Lead strategy is the least conservative as it increases capacity before demand is proven, making it risky but proactive.
Lag strategy (B) waits for demand to exceed capacity before expanding.
Incremental strategy (C) expands gradually over time.
Demand smoothing (D) focuses on managing demand fluctuations, not increasing capacity.
(LO 1.3, See p.54-55)
Linear Programming (LP) can be adopted by many business functions. Who out of the following could use LP modelling? Select ALL that apply.
See the explanation below.
LP is used for quantitative decision-making---finding the best possible outcome using numerical data.
Option C (Marketing Manager)---LP can calculate optimal ad frequency for sales conversion.
Option D (HR Manager)---LP can help in workforce scheduling.
Option E (Logistics Coordinator)---LP can optimise delivery routes for cost efficiency.
Option A and B are incorrect as LP doesn't apply to subjective decisions like product selection or budgeting.
(LO 1.3)
Which of the following are typical objectives of Linear Programming (LP)? Select ALL that apply.
See the explanation below.
Linear Programming (LP) aims to optimise resource allocation by:
Minimising inventory levels (reduce storage costs).
Maximising machine working hours (increase efficiency).
Minimising production costs (reduce expenses).
Maximising labour working hours (increase productivity).
Option C is incorrect---LP aims to minimise, not maximise, transportation costs.
(LO 1.3, See p.47)
White Moon Ltd, a manufacturing organisation, is considering outsourcing transportation. What would be a reason for doing this?
See the explanation below.
Outsourcing replaces fixed costs with variable costs---companies only pay for what they use, rather than maintaining their own fleet.
Option A is incorrect because gaining market access is a benefit of offshoring, not outsourcing.
Option C is incorrect as there is no mention of shareholders in the scenario.
Option D is incorrect since the inefficiency trap relates to offshoring.
(LO 1.2, See p.44)
Which of the following is considered a primary activity in the Value Chain?
See the explanation below.
Marketing and Sales is a primary activity in Porter's Value Chain, directly contributing to delivering value to customers.
Procurement (A), HR (B), and Technology Development (C) are support activities.
(LO 1.2, See p.29)
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