Final answer:
You should consider increasing Factory Capacity when there is anticipated high demand. Decreased demand for products, increased production efficiency, and excess inventory typically do not justify expansion.
Step-by-step explanation:
When deciding whether to increase your Factory Capacity by purchasing additional Standard Capacity Units (SCU), it is pivotal to consider current market conditions and production circumstances. Out of the given options, you should consider increasing Factory Capacity in the scenario of anticipated high demand. This decision aligns with business principles, as expanding capacity can enable the company to meet the higher demand, potentially leading to increased sales and profits.
An increase in production efficiency may indicate that you can produce more with the current capacity, possibly negating the need for expansion. On the opposite end, scenarios such as decreased demand for products and excess inventory suggest that current production is outpacing sales, which would not justify an increase in capacity. It is important to align capacity with market demand to ensure that resources are utilized effectively and to avoid unnecessary costs associated with overcapacity.