Demand is forecast for the next five months as 200,300,500,300,200.The production planner decides to adopt a level strategy,so over the next five months they should produce
A)200,300,500,300,200.
B)500,400,300,200,100.
C)100,200,300,400,500.
D)300,300,300,300,300.

Question

Quizplus · Accepted Answer

A level strategy involves producing a constant amount over each period, rather than varying production to match forecasted demand. Therefore, the production planner should choose a production level that will satisfy the average demand over the next five months, which is (200+300+500+300+200)/5 = 300. Option D provides a constant production of 300 units over each of the next five months, which is the best choice for a level strategy.

Demand Is Forecast for the Next Five Months as 200,300,500,300,200