Harlose Suits owns more equipment than required for manufacturing goods during periods of regular demand in order to tackle sudden demand surges. It also has a certain reserve of produced goods to tackle material shortages. In this case, the reserve of equipment and produced goods are examples of _____.

Question

Quizplus · Accepted Answer

The reserve of equipment and produced goods are examples of the capacity cushion. The capacity cushion is an extra capacity maintained by companies to handle sudden increases in demand or other uncertainties. This ensures that the company can fulfill orders without delay or disruption.

Harlose Suits Owns More Equipment Than Required for Manufacturing Goods