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The firm know volume of sales exactly and increase production capacity for that sales. Can I...

The firm know volume of sales exactly and increase production capacity for that sales. Can I use increase percentage of production capacity for sales growth ?

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Answer #1

For the success of the business, the planning of the capacity utilization is essential. The quality of the products should be ensured for any level of capacity. When a company is planning to increase the production capacity for sales growth, the ability of the company to supply will increase. Then the cost of the production may rise and the quality may decline.

To meet the excess demand, scheduling of overtime may require. This will automatically decrease the quality of the production.

So it is advised to avoid over-utilization of capacity. Because, it will put the company in trouble. Usually in such situations, the company may act to reduce demand with longer delivery times and higher prices.

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