A firm that increases capacity at the beginning of each period to stay ahead of demand uses the ________ approach.
A) lead with an incremental expansion
B) lead with a one-step expansion
C) lag with an incremental expansion
D) lag with a one-step expansion
E) straddle

Question

Quizplus · Accepted Answer

The firm is increasing capacity at the beginning of each period to stay ahead of demand, which suggests a proactive approach. Hence, we can eliminate Lag options (C and D) as they suggest a reactive approach. The firm is also increasing capacity each period, indicating an incremental expansion rather than a one-step expansion. Hence, we can eliminate Lead with a one-step expansion option (B). The most appropriate option is lead with an incremental expansion (A), which reflects the firm's proactive approach and incremental expansion strategy.

A Firm That Increases Capacity at the Beginning of Each