Question

Which of the following is (are) true about capacity cushion?

a.Organizations that have standard products or services generally have smaller capacity cushions.
b.Capacity cushion is the extra capacity used to offset demand uncertainty.
c.Typically, the greater the degree of demand uncertainty, the greater the amount of cushion used.
d.All of the above.
e.None of the above.

Answer 1

Capacity cushion refers to reserve capacity to handle demand increases or production losses. Smaller cushions are common for standard products, and larger cushions offset greater demand uncertainty. All provided statements about capacity cushion are true.

Step-by-step explanation:

The capacity cushion is an important concept in operations management. It refers to the amount of reserve capacity a firm maintains to handle sudden increases in demand or temporary losses in production. The statements about capacity cushion are:

• Organizations with standard products or services generally have smaller capacity cushions.
• Capacity cushion is the extra capacity used to offset demand uncertainty.
• Typically, the greater the degree of demand uncertainty, the greater the amount of cushion used.

All of these statements are true, so the correct answer to the question is option d. All of the above.'