In this approach to managing capacity, a firm subcontracts peak production so that internal production remains level and can be done cheaply.

Question

Quizplus · Accepted Answer

Using subcontracting allows a firm to keep its internal production level and at a consistent cost while still being able to handle peak demand periods. This way, the firm can avoid investing in excess capacity that may go unused during non-peak periods.

In This Approach to Managing Capacity, a Firm Subcontracts Peak