Describe the three capacity strategies and the advantages of each
What will be an ideal response?
Answer: The three common capacity strategies are lead, lag, and match. Capacity is added in anticipation of demand in a lead capacity strategy. The advantages of this approach are that the organization has adequate capacity to meet all demand, even during high periods of growth and that this capacity can be used to preempt competitors that are planning to expand their own capacity. A lag capacity strategy is realized by adding capacity only after increased demand has materialized. The authors indicate three clear advantages to this strategy are a reduced risk of overbuilding, greater productivity due to higher utilization levels, and the ability to put off large investments as long as possible. A match capacity strategy strikes a balance between the lead and lag approaches by attempting to meet demand needs exactly, thereby avoiding periods of high over or underutilization.
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