What is capacity cushion?

• A. The maximum output of a production line.
• B. The extra capacity held beyond expected demand to absorb variability and disruptions.
• C. A safety stock policy.
• D. The minimum inventory level.

Answer: (B)

Capacity cushion is the extra production capacity kept above the expected demand to absorb variability and disruptions in the system. This slack helps the operation cope with unexpected spikes in workload, machine downtime, maintenance, or supplier delays, so you can keep promises to customers even when things don’t go exactly as planned. It’s about having capacity available, not simply the maximum output you could achieve under ideal conditions or how much inventory you hold.

It’s not the maximum output, which is just the line’s top limit without accounting for variability. It’s not safety stock, which refers to extra inventory held to cover demand during lead times, not spare capacity. And it’s not the minimum inventory level, which relates to stock on hand rather than the ability to produce. For example, if a line can produce 100 units but forecast demand is 90, you might maintain a cushion of capacity so you can handle a sudden 10-unit surge or a momentary delay without missed orders.