Question
In: Operations Management
how does it impact when there is resource shortage on company? decline in sales volume; performance?...
how
does it impact when there is resource shortage on company? decline
in sales volume; performance? please explain.
Solutions
Expert Solution
When there is a situation of resource shortage, the operations of the company are negatively impacted. The shortage of resources leads to an increase in the cost of production of the company. It also impacts the processes of the company. The company may not easily conduct its day to day activities or operations with a limited amount of resources. The shortage of resources also leads to an increase in the input price of the company that further increases the price of their products. The high price of products leads to a decrease in the demand for their product and hence decreases the revenue of the company. The volume of sales also decreases when there is a resource shortage as with the limited amount of resources, and an only limited amount of goods can be produced. The performance of the company will also decline when there is resource scarcity as decreased revenue and sales volume will contribute towards the decline in performance.
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