Production facilities that are flexible, in terms of the potential to use different combinations of raw material inputs, are most valuable when
A)the product's demand is highly volatile.
B)the product's price is highly volatile.
C)raw material prices are highly volatile.
D)labor costs are highly volatile.

Question

Quizplus · Accepted Answer

Flexible production facilities allow a company to adapt to changes in raw material prices by switching between different inputs, thus maintaining production costs and margins even when the prices of specific raw materials are highly volatile. This flexibility does not directly address volatility in product demand, product price, or labor costs.

Production Facilities That Are Flexible, in Terms of the Potential