Resource Flexibility:

A change to less worker flexibility needs a larger capacity cushion to pay off for the operation overload that is more likely to occur with a less flexible labour force.

Inventory

A change to less trust on inventory in order to smooth the output rate needs a larger capacity cushion to meet enhanced demands during peak periods.

Scheduling

A change to a more established environment permits a smaller cushion because products or services can be scheduled with more assurance.

Another point of discussion is among the capacity and location decisions. A firm that is expanding eventually should append new facilities and discover suitable locations for them, whereby a firm that is downsizing often must identify which locations to eliminate. In past one decade, General Motors slice back its capacity by shutting down several factories to stop large losses. It faced several problems while choosing between the older units with cooperative and productive workforces and abandoning the expensive, modern plants where labour relations were poor.