A firm will encounter short periods of over- and underutilization of resources with the _____ strategy.
A) capacity lag
B) capacity straddle
C) capacity lead
D) capacity reduction

Question

Quizplus · Accepted Answer

Capacity straddle strategy involves building capacity in anticipation of future demand, resulting in short periods of over- and underutilization of resources. This strategy allows the firm to meet demand during peak periods while still being able to fill orders during off-peak times. Capacity lead strategy involves building capacity ahead of anticipated demand, whereas capacity lag strategy involves building capacity after demand increases. Capacity reduction strategy involves decreasing capacity in response to reduced demand.

A Firm Will Encounter Short Periods of Over- and Underutilization