Companies that must determine well
in advance of the selling season how
many unites of a new product to manu-
Line facture often underproduce products
(5) that sell well and have overstocks of
others. The increased incidence in
recent years of mismatches between
production and demand seems ironic,
since point-of-sale scanners have
(10) improved data on consumers’ buying
patterns and since flexible manufacturing
has enabled companies to
24
produce, cost-effectively, small
quantities of goods. This type of
(15) manufacturing has greatly increased
the number of new products introduced
annually in the United States. However,
frequent introductions of new products
have two problematic side effects. For
(20) one, they reduce the average lifetime of
products; more of them are neither at the
beginning of their life (when prediction
is difficult) or at the end of their life
(when keeping inventory is expen-
(25) sive because the products will soon
become obsolete). For another, as
new products proliferate, demand is
divided among a growing number of
stock-keeping units (SKU’s). Even
(30) though manufacturers and retailers can
forecast aggregate demand with some
certainty, forecasting accurately how
that demand will be distributed among
the many SKU’s they sell is difficult.
(35) For example, a company may be able
to estimate accurately the aggregate
number of shoes it will sell, but it may
be uncertain about which specific
types of shoes will sell more than
other types.
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Q23:
Which of the following most accurately describes the function of the last sentence in the
passage (lines 35-40)?
A. To cite a situation in which the aggregate demand is more important than the
distribution of demand among SKU’s
B. To refute an assertion about the side effects of flexible manufacturing
C. To illustrate an assertion about companies’ ability to forecast demand
D. To provide an example of ways in which companies address the difficulties of
forecasting demand
E. To note an exception to the author’s assertion about distributing demand among
SKU’s
MINE D
ANS C
Q24:
The passage suggests which of the following about divided demand among a growing
number of SKU’s?
A. It has increased the average lifetime of products.
B. It has resulted from retailer’s attempts to predict demand more accurately and
avoid both understocks and overstocks.
C. It has decreased the use of flexible manufacturing by companies.
D. It has not increased the expense of keeping inventory of certain products.
E. It has not prevented companies from predicting aggregate demand with some
certainty.
MINE D
ANS E | 
