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CMA Intermediate · Operations Management and Strategic Management · Introduction to Operations Management

A bank branch in Jaipur wants to smooth a sharp peak in customer arrivals between 12 noon and 2 pm. Which approach suits a service operation but is generally NOT available to a manufacturing firm making storable goods?

Appointment systems or off-peak incentives suit service operations. Since service output cannot be stockpiled, the firm must shift or spread customer demand over time. A manufacturer of storable goods instead levels production by building inventory in slack periods and drawing it down in peaks.

  1. ABuilding finished goods inventory in the lean season
  2. BUsing appointment systems or off-peak incentives to shift customer demandCorrect
  3. COutsourcing a component to a vendor
  4. DSetting up a quality inspection at the end of the line

Explanation

Because service output cannot be stored, service firms manage the demand pattern itself through appointments, reservations and off-peak pricing. Building inventory is the manufacturing tool for levelling demand and is not possible for services. Outsourcing and inspection are available to both types of operation.

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