Why is it dangerous to justify capacity expansion using economies of scale?
A)It is far too specific to use as a basis for capacity decisions
B)Because volume,capacity,and process considerations are looked at individually
C)Because the common notion that unit costs decline for larger facilities due to size is not always accurate
D)It requires consideration of quality,dependability,and flexibility

Question

Quizplus · Accepted Answer

Justifying capacity expansion solely based on economies of scale can be dangerous because the assumption that unit costs will automatically decrease with larger facilities is not always accurate. Other factors like quality, dependability, and flexibility must also be considered. Volume, capacity, and process considerations should also be evaluated individually, rather than relying solely on economies of scale.

Why Is It Dangerous to Justify Capacity Expansion Using Economies