Answer to Question 1
Organizations that are faced with seasonality issues are constantly challenged when determining how much inventory to accumulate. Organizations that process agriculture products are a good example of supply seasonality. While the supply of the raw material is available during only one part of the year, demand is stable throughout the year. Therefore, the finished product usually has to be stored until it is sold. That is, when the raw material is available, it needs to be converted to finished product. This scenario often involves high storage costs and high obsolescence costs. An alternative scenario might be to store the raw material, or some pre-processed version of it, and use it to make the finished product as the demand dictates.
Sometimes seasonality can impact transportation, particularly if domestic water transportation is used. Another example would be the seasonality of the construction industry in the United States and its impact on the availability of flatbed tractor trailers. Although construction takes place in many areas of the United States year round, the northern states experience a slowdown in construction activity during the winter months. As spring approaches in the north, construction activity increases dramatically. The peak springtime construction season places a heavy demand on a fixed capacity of flatbed trailers to move construction supplies.
Answer to Question 2
False
