Which of the following is a capacity balancing option in aggregate planning?

• A. Changing product prices
• B. Subcontracting production to other firms
• C. Offering discounts to increase demand
• D. Advertising to stimulate sales

Answer: (B)

Verified step by step guidance

1. Understand that aggregate planning involves matching supply and demand over a medium-term horizon, typically by adjusting production rates, workforce levels, inventory, and subcontracting.
2. Recognize that capacity balancing options are strategies used to adjust the production capacity to meet demand fluctuations without changing demand itself.
3. Identify that changing product prices, offering discounts, and advertising are demand management strategies, as they aim to influence customer demand rather than production capacity.
4. Note that subcontracting production to other firms is a capacity balancing option because it directly adjusts the available production capacity by outsourcing work to external producers.
5. Conclude that among the given options, subcontracting production to other firms is the correct capacity balancing option in aggregate planning.