A smaller capacity cushion may be preferred if a process is highly capital intensive.

Question

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A highly capital intensive process may require a smaller capacity cushion in order to minimize inventory costs and optimize utilization of expensive equipment or facilities. This is because a larger cushion would result in excess inventory, which could tie up the capital that could be used for other purposes. A smaller cushion allows for quicker production cycles and just-in-time inventory management, which can help reduce costs and increase efficiency.

A Smaller Capacity Cushion May Be Preferred If a Process