Bonus question

An expansionist capacity, which stays ahead of demand, minimizes the chances of sales lost to insufficient capacity.

Question

Bonus question

An expansionist capacity, which stays ahead of demand, minimizes the chances of sales lost to insufficient capacity.

BlackTom AI · Accepted Answer

In this question, we are evaluating whether an expansionist capacity approach—keeping capacity ahead of expected demand—reduces the risk of lost sales due to insufficient capacity.
Option 1: True. An expansionist strategy deliberately builds in capacity ahead of anticipated demand, creating a capacity cushion. This approach lowers the probability that demand cannot be met when sales surge or seasonality spikes occur, thereby reducing stockouts and lost sales. It aligns with concepts of capacity planning where organizations buffer capacity to maintain service levels and meet customer lead times, even if it means tolerating some level of overcapacity during slower periods.
Option 2: False. If capacity is not kept ahead of demand, the firm risks limiting its ability to satisfy orders during peak periods, which can indeed lead to lost sales. However, this option would be correct only if the premise were that expansionist capacity increases the risk of stockouts, which is contrary to the core idea that expanding ahead of demand minimizes those chances. The false alternative would be more appropriate if the statement claimed that staying ahead has no effect on sales losses or that expansionist capacity worsens fulfillment, which is not consistent with capacity planning theory.
Option 3: There is a trade-off consideration where expansionist capacity reduces stockouts but increases costs and potential idle capacity; while this nuance doesn’t negate the benefit of reducing lost sales, it adds context. The question asserts a direct relationship between expansionist capacity and minimized lost sales, which holds true in the sense described, though practitioners weigh the cost implications separately.
Option 4: If the analysis were about a different aspect, such as flexible or reactive capacity instead of expansionist, one could argue different outcomes. But the statement as given explicitly describes expansionist capacity staying ahead of demand, and that scenario is associated with reducing the risk of unmet demand, not with increasing it.

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Bonus question An expansionist capacity, which stays ahead of demand, minimizes the chances of sales lost to insufficient capacity.

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MGS*3100*W10 25 Fall OM Exam 2- Requires Respondus LockDown Browser

Bonus question An expansionist capacity, which stays ahead of demand, minimizes the chances of sales lost to insufficient capacity.

View Explanation

Log in for full answers

Similar Questions

In capacity planning, the “base case” refers to:

In capacity planning, the “base case” refers to:

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Part 1The Gantt chart takes two basic forms. Which form can be used to schedule the capacity of​ facilities? A. the activity progress chart B. the workstation chart C. the load balance chart D. the job progress chart

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More Practical Tools for Students Powered by AI Study Helper

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MGS3100W10 25 Fall OM Exam 2- Requires Respondus LockDown Browser

Part 1The Gantt chart takes two basic forms. Which form can be used to schedule the capacity of facilities? A. the activity progress chart B. the workstation chart C. the load balance chart D. the job progress chart