Certified Production & Operations Manager (POM) Practice Exam

In which product life cycle stage should capacity forecasting be emphasized?

1. Decline stage

2. Introduction stage

3. Growth stage

4. Maturity stage

The correct answer is: Growth stage

Capacity forecasting should be emphasized during the growth stage of the product life cycle. During this stage, a product typically experiences increasing demand as it gains market acceptance and sales begin to rise significantly. Proper capacity forecasting is crucial at this point because companies need to ensure that they can meet the increasing customer demand without overextending their resources or supply chain, which could lead to stockouts or customer dissatisfaction. Accurate forecasting allows organizations to plan appropriately for production levels, inventory management, and resource allocation. It helps in determining the necessary adjustments to capacity to maintain service levels while optimizing costs. Failure to forecast capacity effectively during this critical period can lead to missed sales opportunities or adverse effects on brand reputation due to inability to deliver products on time. In contrast, during other stages such as introduction, while some forecasting is still necessary, the focus is primarily on product establishment and market penetration rather than capacity optimization. In the decline stage, demand typically reduces, making capacity forecasting less relevant, as adjustments may involve scaling down resources. In the maturity stage, where demand stabilizes, the emphasis shifts to maintaining market share and efficiency rather than significantly increasing capacity.