Hike up capacity for potential or rising demand

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Reference no: EM133664327

Question

Companies can choose to hike up capacity for potential or rising demand this has advantages and disadvantages. The clear advantage is the company is ready when the demand comes and the goods are needed. This can also shine bright when competitors were not prepared for such demand and now consumers are being sent to the company that has the stock. A small surplus in a stock as the demand dies down also leaves room open for more sales which can help the company push units. The disadvantages to think about though are things like incorrect forecast of demand. In this case you are left with a huge surplus taking up space and not being moved. The other is depending on the occupation of the bussiness, The employees might be put in an increased work load with the increase in cpacity that can lead to low morale or burnout. At the end of the day I think that attempting to bolster like this is better for a seasoned company that can better depict the change in market based off previous years to safely make a decision.

Reference no: EM133664327

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