Which of the following is true about a lagging strategy?
A)The most aggressive strategy for capacity expansion is a lagging strategy.
B)When a company pursues a lagging strategy,it increases its capacity only when there is a sizeable increase in demand.
C)With a lagging strategy the firm is most likely to have idle capacity or excess inventories.
D)The firm is able to adapt quickly to changes in demand.

Question

Quizplus · Accepted Answer

With a lagging strategy, the company waits until there is a sizeable increase in demand before increasing capacity. This means that the company may experience periods of excess demand before it expands capacity to meet that demand. This can result in lost sales or dissatisfied customers, as well as the possibility of idle capacity or excess inventories when demand eventually levels off. Therefore, option B correctly describes a lagging strategy. Options A, C, and D are incorrect based on this definition.

Which of the Following Is True About a Lagging Strategy