It is never appropriate to expand capacity in advance of growing demand because the excess capacity will always be underutilized.

Question

Quizplus · Accepted Answer

It is not always necessary that excess capacity will be underutilized. In some cases, companies expand capacity in advance of growing demand to gain a competitive advantage, reduce costs, improve efficiencies, and be prepared to meet unexpected spikes in demand. However, excessive expansion without proper market analysis can lead to underutilization of capacity. Ultimately, it depends on the industry, market conditions, and the company's strategy.

It Is Never Appropriate to Expand Capacity in Advance of Growing