Ivan is an operations manager of a chain of amusement parks. Before she determines a new location for a park, she must forecast what the customer demand will be, so she can determine the appropriate capacity. Why is it important for Ivan to efficiently plan the park's capacity needs?
A) Capacity levels that fall short can drive operation costs up due to unused and expensive resources.
B) Once a capacity decision has been implemented, changing the decision can incur substantial costs.
C) When there is more capacity available than needed, the organization may lose customers.
D) Too much capacity can result in unmet demand.
E) Capacity should reflect future demand and stakeholder desires from the beginning because adjusting for these things later is impossible.

Question

Quizplus · Accepted Answer

Efficiently planning the organization's capacity needs is an important process for the operations manager. Capacity levels that fall short can result in unmet demand and lost customers, while having more capacity than needed drives operating costs up due to unused and expensive resources. Once a capacity decision has been implemented, it is very difficult to change the decision without incurring substantial costs. Although change is expensive, it is more expensive in the long run not to adjust to future demand and stakeholder desires.

Ivan Is an Operations Manager of a Chain of Amusement