Question

If capacity is expensive and inventory is cheap, a good reason to hold inventory is to level load capacity by using inventory as a buffer between demand variability and capacity utilization.
True or False?

Answer 1

If capacity is expensive and inventory is cheap, a good reason to hold inventory is to level load capacity by using inventory as a buffer between demand variability and capacity utilization-The statement is true

Explanation:

Capacity management  can be defined as the act of management to ensure maximization of the product output and the potential activities associated with  production,under all the given circumstances

The capacity of a business measures how much the business  can achieve, produce, or sell within a given time period.It refers to the maximum output rate  a company can produce

Load capacity is use to define the  maximum demand, stress, or load that can  be placed/leveled  on a given system under normal or specified conditions for an extended period of time.