What Are the Possibilities for Matching Capacity to Sales and Vice

question 5

Essay

What are the possibilities for matching capacity to sales and vice versa when doing S&OP in a service environment?

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Definitions:

Short Run

A period in which at least one factor of production is fixed, limiting the ability of a business to adjust to changing market conditions fully.

Variable Cost

A cost that increases when the firm increases its output and decreases when the firm reduces its output.

Average Total Cost

The total cost divided by the number of units produced, representing the average cost of production per unit.

Purely Competitive Industry

An industry characterized by many firms offering identical products where no single firm can influence the market price.