Uncertainty of demand and price
A)drives the value of building flexible production capacity at a plant.
B)eliminates the value of building flexible production capacity at a plant.
C)facilitates the value of building flexible production capacity at a plant.
D)has no effect on the value of building flexible production capacity at a plant.

Question

Quizplus · Accepted Answer

When demand and price are uncertain, it is difficult to accurately predict production levels and the necessary capacity needed to meet that demand. Building flexible production capacity allows for the ability to adjust production levels and meet changing demand without incurring significant costs of building entirely new facilities. Therefore, building flexible production capacity at a plant is valuable when there is uncertainty of demand and price.

Uncertainty of Demand and Price