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Chapter 1: Q. 5-6PE (page 128)

We have this when we have the ability to serve more customers than we expect to have to serve.

Short Answer

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Capacity cushion

Step by step solution

01

Capacity cushion

When the degree of additional capacity is added to the farming organization to maintain rapid increases in demand or unexpected reductions of manufacturing capacity is referred to as acapacity cushion.

02

Example of capacity cushion

For instance, a 10% capacity cushion exists if a facility's projected monthly demand is $ 400,000 in items or services and it can generate up to $ 450,000.

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