1. Cathy has decided to increase her firm's capacity in line with the mean expected increase in demand from a series of forecasts she had prepared. What strategy is she employing?

a. Average strategy

b. Lead strategy

c. Lag strategy

d. Hedging strategy

2. How does capacity relate to profit?

a. More capacity equals less profit.

b. There is no relation.

c. More capacity can create either loss or greater profit.

d. More capacity equals greater profit.

3. How is output related to capacity?

a. An increase in capacity can increase output.

b. An increase in capacity reduces output.

c. It's not.

d. A decrease in capacity increases output.

4. Abe decides to only increase his firm's capacity when there's actual demand sufficient to justify it. What strategy is he employing?

a. Lag strategy

b. Average strategy

c. Lead strategy

d. Demand strategy

5. Beth decides to increase her firm's capacity because she's forecasting a large uptick in demand. What strategy is she employing?

a. Lead strategy

b. Supply strategy

c. Average strategy

d. Lag strategy