Which one of the following statements concerning capacity alternatives is best?
A) Subcontracting can help overcome short-term capacity shortages by offloading work on other producers.
B) Creating anticipation inventory increases customization, and is particularly favored in the service industry.
C) Adjusting workforce levels is preferred when the workforce is skilled and the labor pool is small.
D) Using overtime capacity usually improves worker productivity.

Question

Quizplus · Accepted Answer

Subcontracting provides a way to increase capacity quickly, without making a long-term commitment or large investment in new capacity. This can be particularly helpful in meeting short-term demand surges or dealing with unexpected capacity shortages.

Option B is incorrect because creating anticipation inventory doesn't increase customization; rather, it increases the likelihood of obsolescence and excess inventory.

Option C is incorrect because adjusting workforce levels may be problematic when the labor pool is small, particularly if the skills required are specialized or hard to find.

Option D is incorrect because excessive use of overtime can lead to worker fatigue, decreased productivity, and increased costs.

Which One of the Following Statements Concerning Capacity Alternatives Is