Which one of the following statements about capacity cushion is best?
A) Large capacity cushions are more likely to be utilized when future demand is known.
B) Small cushions are used when the product mix often changes.
C) Return of investment is about the same for capital-intensive firms, regardless of their capacity cushions.
D) The best-sized cushion varies by industry and firm.

Question

Quizplus · Accepted Answer

The best-sized cushion for a firm's capacity varies based on the industry and the firm's specific circumstances. Factors such as demand variability, lead times, and production flexibility all play a role in determining the appropriate level of capacity cushion. Therefore, statement D is the best choice as it acknowledges the need to consider industry and firm-specific factors when determining the appropriate capacity cushion. Statements A, B, and C are all incorrect as they make incomplete or inaccurate claims about the relationship between capacity cushion and certain factors such as demand, product mix, or return on investment.

Which One of the Following Statements About Capacity Cushion Is