Which of the following statements is not true about capacity?
A) Capacity decisions determine output capabilities
B) Capacity is generally defined in terms of an output rate
C) All five competitive priorities can be linked to capacity
D) For any facility, cost per unit is at its lowest when the production or service rate exceeds the design capacity

Question

Quizplus · Accepted Answer

Capacity decisions indeed determine the output capabilities of a facility and are typically defined in terms of an output rate. All five competitive priorities (cost, quality, time, flexibility, and innovation) can be linked to how a facility manages its capacity. However, the statement that cost per unit is at its lowest when the production or service rate exceeds the design capacity is not true. In reality, when production exceeds design capacity, costs per unit often increase due to factors like overtime, equipment wear, and decreased efficiency.

Which of the Following Statements Is Not True About Capacity