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CMA Intermediate · Operations Management and Strategic Management · Designing of Operational Systems and Control

A manufacturer in Chennai decides to build extra capacity ahead of expected demand growth, accepting the risk of idle capacity. Which capacity strategy is this?

This is a lead strategy, where capacity is added ahead of anticipated demand. It reduces the risk of shortages and lost sales but can leave idle capacity if demand falls short, unlike lag or match approaches.

  1. ALag strategy
  2. BMatch strategy
  3. CLead strategyCorrect
  4. DTracking strategy

Explanation

A lead strategy adds capacity in anticipation of demand, which can capture growth and avoid shortages but risks underused capacity. A lag strategy adds capacity only after demand is proven. A match strategy adds it in small increments following demand.

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