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Capacity and Inventory Cost Systems
Analyze the capacity and inventory cost systems of an organization.
What measures might the firm use to define capacity? List two possible ways the company could increase capacity if demand exceeded capacity. Compare the ending inventory balance for the most recent year to the prior year. Are inventory balances increasing or decreasing? Skim the Management’s Discussion and Analysis section. In the context of this section, do you believe the ending inventory balance is more likely due to increased expected demand for next year, unexpectedly low demand for this year, or overproduction?