Over-capacity problems are minimised if forecasts are optimistic.
A) Capacity-leading strategy
B) Capacity-lagging strategy

Question

Quizplus · Accepted Answer

Capacity-lagging strategy involves having a lower capacity than the forecasted demand, which means a lower investment cost for capacity. However, this strategy also runs the risk of over-capacity problems if the forecasts are too optimistic. Therefore, the best choice to minimise over-capacity problems is to adopt a capacity-lagging strategy.

Over-Capacity Problems Are Minimised If Forecasts Are Optimistic