Which one of the following is not a basic option for altering demand?
A. Promotion
B. Backordering
C. Pricing
D. Subcontracting
E. Exporting
The correct answer and explanation is :
Correct Answer:
E. Exporting
Explanation:
In operations and supply chain management, businesses often use various strategies to alter demand to balance supply and demand effectively. These strategies primarily focus on influencing customer behavior, managing production capacity, and ensuring efficient resource allocation. Let’s analyze each of the options provided:
- Promotion (A) – This is a fundamental strategy used to alter demand. Companies run advertising campaigns, offer discounts, or use special offers to encourage customers to purchase more products during off-peak seasons.
- Backordering (B) – This refers to allowing customers to place orders even when stock is unavailable, with delivery promised at a later date. Businesses use this strategy to manage demand when supply is constrained or to smooth out production workloads.
- Pricing (C) – Adjusting prices is a direct way to influence demand. Lowering prices can stimulate demand, while increasing prices can help manage excessive demand. Seasonal pricing, discounts, and dynamic pricing are common tactics.
- Subcontracting (D) – This involves outsourcing part of the production process to external vendors to handle excess demand. Subcontracting allows companies to adjust production capacity without permanently expanding facilities or hiring additional employees.
- Exporting (E) – Unlike the other options, exporting is not a direct method for altering demand within the company’s existing customer base. Exporting refers to selling goods in foreign markets, which is more about expanding market reach rather than adjusting demand domestically.
Since exporting does not directly alter demand in the short term but instead opens new markets, option E is the correct answer. Businesses use exporting as a long-term growth strategy rather than a short-term demand management tool.