With a level capacity plan,______.
A)the company produces on a given day what is demanded on that day
B)the company produces at a steady rate and stores inventory
C)the firm may experience fluctuations in employment
D)the firm has low revenue margins due to high per-unit costs

Question

Quizplus · Accepted Answer

With a level capacity plan, the company produces at a steady rate and stores inventory. This means that the production rate remains constant regardless of fluctuations in demand, resulting in inventory buildup during low demand periods and a decrease in inventory during high demand periods. This provides stability in the workforce as the production rate remains constant, and the company can make use of economies of scale by producing in bulk, resulting in lower per-unit costs.

With a Level Capacity Plan,______