Question

In the context of strategies for expanding capacity, which of the following statements is true of one large capacity increase? a. An advantage of using this strategy is that the fixed costs of construction and operating system setup need to be incurred only once. b. When this strategy is used, there is always excess capacity and safety capacity to meet unexpected demand from large orders is provided. c. This strategy waits until demand has increased to a point where additional capacity is necessary. d. This strategy aims to match capacity additions with demand as closely as possible.

Answer 1

A

Step-by-step explanation:

An advantage of using this strategy is that the fixed costs of construction and operating system setup need to be incurred only once enabling the firm to allocate these costs over one large project.