Certified Production & Operations Manager (POM) Practice Exam

When should a product strategy prioritize forecasting capacity requirements?

1. At the introduction stage of the product life cycle

2. During the maturity stage

3. At the growth stage of the product life cycle

4. During the decline stage

The correct answer is: At the growth stage of the product life cycle

Prioritizing forecasting capacity requirements during the growth stage of the product life cycle is crucial due to several factors inherent to this phase. The growth stage is characterized by rapidly increasing demand as the product gains acceptance in the market. Companies must be prepared to scale production to meet this rising demand, which requires accurate capacity forecasting. During this stage, businesses often experience a surge in sales, and failure to anticipate and accommodate this growth can lead to lost sales opportunities, customer dissatisfaction, and erosion of market share. Forecasting capacity requirements helps organizations ensure that they have the right resources, production capabilities, and inventory levels to meet customer demand efficiently. In contrast, during the introduction stage, the focus is typically on building awareness and generating initial sales rather than extensive capacity planning. During the maturity stage, growth stabilizes, and while forecasting remains important, the urgency for scaling capacity decreases. Finally, during the decline stage, demand typically wanes, making capacity considerations less critical as companies may be winding down production or shifting focus to other products. Thus, accurate forecasting of capacity is most vital during the growth stage to successfully capitalize on market opportunities.