If demand is irregular, a firm's production flexibility is likely to influence the severity of stock-out problems in the channel of distribution.

Question

Quizplus · Accepted Answer

If a firm has production flexibility, it can adjust its production levels to match the fluctuating demand, which can help prevent stock-out problems in the channel of distribution. However, if a firm does not have production flexibility, it may struggle to keep up with sudden spikes in demand and may experience more severe stock-out problems.

If Demand Is Irregular, a Firm's Production Flexibility Is Likely