Question

Q2 Should a firm always attempt to meet demand"? Why or why not?
Give an example of a solution where a pure
planning strategy may be uneconomical from a practical stand point. ​

Answer 1

Answer:

Generally, when you buy products from vendors, you get discounts for higher-volume purchases. If you under-buy and don't meet demand, you miss an opportunity to get a better cost per unit through a larger purchase from your supplier. Forecasting demand accurately allows you to more easily make large purchases.

For example in aqueous solution of sugar no more sugar can be dissolved at room temperature. (b) Pure Substance: Any substance is said to be pure if and only if it is made up of single type of particles means all the particles of that substance should be of same chemical nature. For example water, sugar, salt etc.

Answer 2

It depends on the nature of the product and competition, size of the firm, extent of the market, brand name, the season, pricing and profit margin.

If it meets demand fully, the demand may get saturated and production may slacken. If the demand is not met adequately, it may encourage competition . If the brand value is strong, it may lead to black marketing.

What large firms generally do is to resort to strong advertising to stimulate demand, but it may not work in all situations. Most people do not change their brands, merely based on rival advertising. Selling costs may not always result in proportionate sales. Product differentiation would help to maintain strong demand which has to be met.

Generally, when we buy products from vendors, we get discounts for higher-volume purchases. If you under-buy and don’t meet demand, you miss an opportunity to get a better cost per unit through a larger purchase from your supplier. Forecasting demand accurately allows you to more easily make large purchases.

#SP J2