How does the balancing of demand and supply in a manufacturing operations effects the bottom line?

Expert Solution

Not only the manufacturing organization but the entire business is going to be affected negatively due to failing to have a proper balance between demand and supply. There may not be adequate raw material to meet the production demand. It can result in increased production costs mainly resulting from the unscheduled changeovers in order to fulfill the unplanned demand. Excessive or relatively costlier inventory may be stocked for discontinued or slow moving products.

Apart from this, the bottom line of earning maximum profit from the production will not be accomplished as if demand and supply is not matched, then the company may be losing on the revenue which it could generate if it were able to fulfill the demand with the proper supply of product. The customers will switch to other companies and this will have a long-term impact on the overall performance of the company.

In order to capture each and every business opportunity, it is important for the business organizations to have a proper balance in demand and supply.

Rahul Sunny answered 1 year ago

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