Which of the following is a key difference between aggregate planning for goods and for services?

• A. Goods require more labor flexibility than services during aggregate planning.
• B. Aggregate planning for goods does not consider capacity constraints, while services do.
• C. Goods can be inventoried, while services generally cannot be stored for later use.
• D. Services are always produced before demand is known, while goods are produced after demand is known.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of aggregate planning, which involves developing, analyzing, and maintaining a preliminary, approximate schedule of the overall operations of an organization. It aims to balance supply and demand by adjusting production rates, labor levels, inventory levels, and other controllable variables over a medium-term horizon.
2. Step 2: Recognize the fundamental difference between goods and services in terms of inventory. Goods are tangible products that can be produced, stored, and inventoried for future use, allowing companies to manage fluctuations in demand by building up or drawing down inventory.
3. Step 3: Understand that services are intangible and perishable, meaning they cannot be stored or inventoried. Once a service is performed, it cannot be saved for later; this characteristic significantly impacts how aggregate planning is approached for services compared to goods.
4. Step 4: Analyze the given options in light of these characteristics: the key difference is that goods can be inventoried, while services generally cannot be stored for later use. This affects how capacity and demand are managed in aggregate planning.
5. Step 5: Conclude that the correct key difference is the inventory capability: goods can be inventoried, allowing for production before demand is fully known, whereas services must be produced and consumed simultaneously, limiting inventory options.