Q 1. (A) Explain the difference between PULL and PUSH production systems. Q 1. (B) Which...

Q 1. (A) Explain the difference between PULL and PUSH production systems.

Q 1. (B) Which one is more profitable for the focal firm?

Solutions

Expert Solution

(A).

The Pull production system is represented by Make to order strategy. In the system, production is based on actual customer demand. So, if customer demand for a particular product is 1000 units in a month, then 1000 units of the product shall be produced in the month as per Pull strategy.

The Push production system is represented by Make to stock strategy. In this system, the production is based on market forecasts and not on actual customer demand. So, if it is forecasted that there shall be a demand of 1500 units of a product, then 1500 units of the product shall be produced. These units are then pushed to the customers in the market.

(B)

Focal firms need to be highly responsive in their operations. They may be required to quickly respond to customer demands and competitor's moves. Therefore, the Pull production system is more profitable for a focal firm. This production system helps the focal firm to effectively respond to changing market conditions, and to better manage the financial risks related to changes in market conditions.

keosha answered 1 week ago

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