Capacity Decisions Are Usually Linked with Other Decision Areas

question 114

Multiple Choice

Capacity decisions are usually linked with other decision areas.If a system is well balanced,which one of the following changes requires a larger-capacity cushion?

• A) Yield losses in the production process are reduced.
• B) Schedules for production are more stable.
• C) The capital intensity of the process is increased.
• D) The company promises faster delivery times to customers.

---

Definitions:

Income Statement

A financial statement that shows a company's revenues, expenses, and net income or loss over a specific period.

Acid Test Ratio

A financial metric that evaluates a company's ability to pay off its current liabilities with quick assets like cash, marketable securities, and accounts receivable.

Current Liabilities

Short-term financial obligations that are due within one year or within the normal operating cycle of a business.

Accounts Receivable

Money owed to a business for goods or services that have been delivered or used but not yet paid for by customers.