If a company decides to outsource and then has freed capacity, the decision on what to do with that freed capacity would be based upon

Question

Quizplus · Accepted Answer

The decision on what to do with freed capacity should be based on opportunity costs. Opportunity cost is the value of the next best alternative forgone when making a decision. It helps a company determine the cost of not using the freed capacity for an alternative purpose, such as investing in a new product or service line, expanding the business, or improving existing operations. Considering opportunity costs can help a company maximize its resources and make more informed decisions.

If a Company Decides to Outsource and Then Has Freed