What is a capacity cushion?

• A. Buffer stock used only for promotions.
• B. Inventory held at supplier warehouse for convenience.
• C. Extra production capacity reserved to absorb demand spikes or supply disruptions.
• D. Reducing manufacturing capacity to save costs.

Answer: (C)

Capacity cushion means having extra production capacity set aside beyond the expected workload so the operation can absorb variability in demand or supply. This reserve of capacity—like extra shifts, machines, or overtime—lets the system ramp up quickly when demand spikes or when a supplier disruption happens, helping to maintain on-time delivery and avoid stockouts. It’s different from safety stock, which is extra inventory kept to cover uncertainty in demand or lead times; the cushion here is about capacity, not inventory. The other ideas describe holding more inventory or cutting capacity to save costs, which don’t provide the same quick-response protection against variability.