Question:

A level production strategy relies on a constant output rate and capacity, while varying inventory and backlog levels to handle the fluctuating demand pattern. Describe why a pure service industry (e.g. accounting or law firms) may or may not be able to implement this type of technique.

Answer:

Hello class,

"A level production strategy relies on a constant output rate and capacity while varying inventory and backlog levels to handle the fluctuating demand pattern" (Wisner, J. D., Tan, K.-C., & Leong, G. K. 2019. pg. 189). This kind of strategy relies on a flow of fluctuating inventory and backlog. For example, if an item is sold out of finished goods inventory, that action would spark a plan to replace that item. However, fluctuations in demand can result in excess inventory and an increase in backlog. While "Pure services, offering few tangible products to customers" (Wisner, J. D., Tan, K.-C., & Leong, G. K. 2019. pg. 450).

The functionality for this kind of strategy works best in trades, people helping people for a price. In a pure service, there is nothing to replenish. The workflow does not fluctuate like replacing items on a shelf; it measures these trade benefits. It would not be conducive for a pure service to adapt to a level production strategy. A level production strategy would work best in an inventory demand workplace where the inventory is consumed consistently. On the other hand, trade services can spike seasonally but not always, which is another reason this style would be inefficient.

Teacher Response: Would like help understanding what he is asking

"I had a previous student state in regards to a law firm that "...in a way level production is being used because a law firm would be matching the demand with the number of attorneys they hire for the firm." She took a different stance from others as many feel because of a lack of a produced product, the level of production isn't applicable. I like challenging conventional thought as well (smile)!! That student's argument was that even though attorneys do not produce a physical product, they still produce an outcome and that the lawyers are acting on behalf of clients to do work that a person cannot do themselves.

What are your thoughts on the stance taken? Do you agree or disagree (why or why not)?"

What is he asking for? I do not get it.

thank you