14. Which tactic is used in aggregate planning to temporarily increase capacity without hiring?
Answer: A
Subcontracting is used in aggregate planning to temporarily increase capacity without hiring.
Subcontracting allows a company to leverage external resources to meet demand without the need for permanent hiring. This tactic provides flexibility in capacity management.
A) Subcontracting
Subcontracting is a strategic approach where a company hires external vendors or suppliers to fulfill part of its production or service requirements. This method enables businesses to quickly increase their capacity in response to demand fluctuations without the long-term commitment or costs associated with hiring new employees.
B) Back-ordering
Back-ordering refers to the practice of taking orders for products that are not currently in stock, with the promise to deliver them once they become available. While this can help manage demand, it does not actually increase capacity; instead, it postpones delivery and may lead to customer dissatisfaction.
C) Pricing promotions
Pricing promotions involve reducing prices to stimulate demand and increase sales. While this tactic can potentially drive higher sales volumes, it does not address capacity issues directly; it may even exacerbate them if the increased demand cannot be met with the existing workforce and resources.
D) Safety-stock build-up
Safety-stock build-up involves maintaining extra inventory to buffer against demand variability or supply chain disruptions. Although it can help manage risks, it does not increase production capacity or enable a company to handle higher demand levels without additional resources.
Conclusion
Subcontracting stands out as the most effective tactic for temporarily increasing capacity without hiring, as it allows businesses to adapt to demand changes quickly by utilizing external resources. In contrast, back-ordering, pricing promotions, and safety-stock build-up either do not increase capacity or may lead to other operational challenges. Thus, subcontracting is the optimal choice in aggregate planning for maintaining flexibility and responsiveness.