Management has decided to add capacity incrementally in smaller chunks as needed, rather than purchasing one large facility. This decision ____________________.
A) is very risky
B) will result in low initial costs
C) will ultimately result in lower costs per unit if demand increases rapidly
D) positions the company to be well prepared for high demand in the future
E) can lead to a large amount of excess capacity

Question

Quizplus · Accepted Answer

Adding capacity incrementally in smaller chunks as needed rather than purchasing one large facility will result in lower initial costs because the company is avoiding the large upfront investment in a facility that may not be fully utilized immediately.

Management Has Decided to Add Capacity Incrementally in Smaller Chunks