,TLMT 313 Week 5 Quiz 4 | Supply Chain Management (2026)
Q&A | AMU
1. Which of the following best describes the concept of capacity management in a supply
chain context?
A) The process of managing the financial resources of a firm
B) The process of balancing supply and demand to maximize profitability
C) The process of reducing the number of employees in a firm
D) The process of managing customer relationships
Correct Answer: B) The process of balancing supply and demand to maximize profitability
Rationale: Capacity management involves aligning the organization's production capacity
with demand to optimize resource utilization and profitability. It includes strategies for both
times when demand exceeds capacity and when capacity exceeds demand. This is a core
concept in supply chain management.
2. Cross-training workers is a typical capacity management technique for times when demand
exceeds capacity.
A) True
B) False
Correct Answer: A) True
Rationale: Cross-training workers is a strategy used when demand exceeds capacity. It
allows employees to perform multiple tasks, increasing flexibility and enabling the
organization to meet higher demand without hiring additional staff. This is a common
capacity management technique.
,3. Which of the following is a service strategy characterized by the idea that a service can
serve a narrow target market better than a broad market?
A) Cost leadership strategy
B) Differentiation strategy
C) Focus strategy
D) Integration strategy
Correct Answer: C) Focus strategy
Rationale: A focus strategy, also known as a niche strategy, targets a specific, narrow market
segment. The idea is that by concentrating on a particular segment, the service can better
meet the needs of that segment than a broad market approach. This is one of Porter's generic
strategies.
4. Quick recovery from service failures may serve as good word-of-mouth advertising for the
firm.
A) True
B) False
Correct Answer: A) True
Rationale: When a firm effectively recovers from a service failure, it can turn a negative
experience into a positive one. Customers who experience excellent service recovery often
become more loyal and may share positive word-of-mouth advertising. This is known as the
service recovery paradox.
5. What is the primary goal of capacity management when demand is less than capacity?
A) To increase prices to reduce demand
B) To stimulate demand or adjust capacity to match demand
, C) To lay off workers
D) To reduce the quality of service
Correct Answer: B) To stimulate demand or adjust capacity to match demand
Rationale: When demand is less than capacity, the goal of capacity management is to either
stimulate demand (through marketing, promotions, or pricing) or adjust capacity (by reducing
staff, scaling back operations, or finding alternative uses for resources). This helps minimize
the costs of unused capacity.
6. Which of the following is a common strategy for managing demand when it exceeds
capacity?
A) Reducing marketing efforts
B) Increasing prices or using a reservation system
C) Decreasing production
D) Reducing customer service
Correct Answer: B) Increasing prices or using a reservation system
Rationale: When demand exceeds capacity, organizations may use strategies such as
increasing prices, implementing reservation systems, or prioritizing higher-value customers
to manage demand. These approaches help balance supply and demand without sacrificing
quality.
7. What is the term for the practice of intentionally under-promising and over-delivering to
customers?
A) Service recovery
B) Customer relationship management
C) Managing expectations
D) Capacity management
Q&A | AMU
1. Which of the following best describes the concept of capacity management in a supply
chain context?
A) The process of managing the financial resources of a firm
B) The process of balancing supply and demand to maximize profitability
C) The process of reducing the number of employees in a firm
D) The process of managing customer relationships
Correct Answer: B) The process of balancing supply and demand to maximize profitability
Rationale: Capacity management involves aligning the organization's production capacity
with demand to optimize resource utilization and profitability. It includes strategies for both
times when demand exceeds capacity and when capacity exceeds demand. This is a core
concept in supply chain management.
2. Cross-training workers is a typical capacity management technique for times when demand
exceeds capacity.
A) True
B) False
Correct Answer: A) True
Rationale: Cross-training workers is a strategy used when demand exceeds capacity. It
allows employees to perform multiple tasks, increasing flexibility and enabling the
organization to meet higher demand without hiring additional staff. This is a common
capacity management technique.
,3. Which of the following is a service strategy characterized by the idea that a service can
serve a narrow target market better than a broad market?
A) Cost leadership strategy
B) Differentiation strategy
C) Focus strategy
D) Integration strategy
Correct Answer: C) Focus strategy
Rationale: A focus strategy, also known as a niche strategy, targets a specific, narrow market
segment. The idea is that by concentrating on a particular segment, the service can better
meet the needs of that segment than a broad market approach. This is one of Porter's generic
strategies.
4. Quick recovery from service failures may serve as good word-of-mouth advertising for the
firm.
A) True
B) False
Correct Answer: A) True
Rationale: When a firm effectively recovers from a service failure, it can turn a negative
experience into a positive one. Customers who experience excellent service recovery often
become more loyal and may share positive word-of-mouth advertising. This is known as the
service recovery paradox.
5. What is the primary goal of capacity management when demand is less than capacity?
A) To increase prices to reduce demand
B) To stimulate demand or adjust capacity to match demand
, C) To lay off workers
D) To reduce the quality of service
Correct Answer: B) To stimulate demand or adjust capacity to match demand
Rationale: When demand is less than capacity, the goal of capacity management is to either
stimulate demand (through marketing, promotions, or pricing) or adjust capacity (by reducing
staff, scaling back operations, or finding alternative uses for resources). This helps minimize
the costs of unused capacity.
6. Which of the following is a common strategy for managing demand when it exceeds
capacity?
A) Reducing marketing efforts
B) Increasing prices or using a reservation system
C) Decreasing production
D) Reducing customer service
Correct Answer: B) Increasing prices or using a reservation system
Rationale: When demand exceeds capacity, organizations may use strategies such as
increasing prices, implementing reservation systems, or prioritizing higher-value customers
to manage demand. These approaches help balance supply and demand without sacrificing
quality.
7. What is the term for the practice of intentionally under-promising and over-delivering to
customers?
A) Service recovery
B) Customer relationship management
C) Managing expectations
D) Capacity management
