Why does volatility of demand have a higher effect on a service delivery system than on a manufacturing system?
What will be an ideal response?
The impact of demand volatility on services is discussed in the text on page 109. A successful response to this question will mention the following three issues: (1) a service cannot be inventoried and thus must be produced as demanded; (2) customers interact directly with the service delivery system and each may have unique needs or will require different levels of service; and (3) consumer behaviors can magnify volatility of demand very significantly in service operations.
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