Certified Production & Operations Manager (POM) Practice Exam

Is it true that service operations require additional inventory due to the unpredictability of consumer demand?

1. True

2. False

The correct answer is: False

The assertion that service operations require additional inventory due to the unpredictability of consumer demand is not typically accurate. In service operations, the focus is primarily on managing capacity and ensuring that the service is available when customers need it, rather than maintaining physical inventory like in manufacturing. Service industries often operate on a just-in-time basis, which means they aim to have resources and personnel available as required without holding excess stock. Additionally, services are intangible, and the "inventory" can often be thought of as the available service hours or the readiness of service personnel, rather than physical goods. Unlike products, the demand for services can indeed fluctuate, but service operations tend to adapt by employing strategies such as flexible staffing or scheduling rather than accumulating additional inventory. Therefore, understanding that the nature of service operations prioritizes readiness and responsiveness over inventory management clarifies why the correct response to the question is that it is false.