The Capacity Call
Expand or Wait
Syllabus
From Module 1 — read a sample
Capacity decisions are among the most consequential in operations because they convert variable cost into fixed cost — and fixed costs don't flex when demand softens. The instinct under pressure is to expand; the discipline is to ask whether the pressure is real, durable, and large enough to justify the commitment. A $4M pile of unfulfilled orders looks like opportunity, but capital expansion at 18-month lead time to capture orders that may not survive that long is a bet on the future disguised as a response to the present. The right question is always: what is the cheapest reversible option that buys time to make the right irreversible decision?
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