In line with the organization's objectives,the sales managers at MagnaCorp must ensure that all products are sufficiently stocked so that customer orders are fulfilled and stockout situations do not arise.The operations managers,on the other hand,were instructed to lower inventory costs and hence,prefer to keep stock levels to a minimum.This situation is an example of ________.
A)management by objectives
B)secondary objectives
C)intermediate-term plans
D)planning subsystems
E)suboptimization

Question

Quizplus · Accepted Answer

This situation is an example of suboptimization, which occurs when one department or unit optimizes its own objectives without considering the impact on the organization as a whole. In this case, the sales managers are optimizing customer service by ensuring sufficient product availability, while the operations managers are optimizing inventory costs by keeping stock levels to a minimum. However, these objectives conflict and may lead to stockout situations or poor customer service. Thus, suboptimization occurs when one objective is pursued at the expense of overall organizational objectives.

In Line with the Organization's Objectives,the Sales Managers at MagnaCorp