Why can justifying capacity expansion with economies of scale be dangerous?
A)It is far too specific to use as a basis for capacity decisions
B)Because volume,capacity,and process considerations are looked at individually
C)Because the common notion that unit costs will decline for larger facilities due to size is not necessarily accurate
D)It requires consideration of quality,dependability,and flexibility

Question

Quizplus · Accepted Answer

Justifying capacity expansion solely based on economies of scale can be dangerous because the assumption that unit costs will decline for larger facilities due to size is not necessarily accurate. Other factors like quality, dependability, and flexibility must also be considered before making a decision. Therefore, option C is the correct choice. Option A is incorrect because economies of scale is a general concept used in capacity decisions. Option B is incorrect because volume, capacity, and process considerations are looked at together, not individually. Option D is incorrect because while quality, dependability, and flexibility are important factors, they are not directly related to the concept of economies of scale.

Why Can Justifying Capacity Expansion with Economies of Scale Be