Excess Capacity Is Required in a Service System Because Variability

question 14

True/False

Excess capacity is required in a service system because variability in customer arrivals and service times creates idle capacity.

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Definitions:

Interest Expense

Interest expense is the cost incurred by an entity for borrowed funds, which can include interest on bonds, loans, convertible debt, and lines of credit.

Operating Cash Flow

The cash generated from the normal operating activities of a business, reflecting its operational profitability.

Net Income

A company's overall earnings following the deduction of all expenses and taxes from its income.

Sunk Costs

Expenses that have already been incurred and cannot be recovered or altered, and should not affect future business decisions.