In this approach to managing capacity,a firm purchases peak production so that internal production remains level and can be done cheaply.

Question

Quizplus · Accepted Answer

This approach is known as subcontracting. By purchasing peak production from other companies, the firm can keep its internal production level and avoid the costs of expanding capacity. This approach also allows for greater flexibility in meeting demand fluctuations without having to invest in additional resources.

In This Approach to Managing Capacity,a Firm Purchases Peak Production