Briefly discuss how uncertainty affects capacity decisions.

Here is a tip:
All organizations perform a function of capacity planning to meet the demands efficiently.

Explanation
Capacity decision refers to the decision of the management to utilize the capacity in the best possible manner to generate maximum output. Uncertainty is the situation that would come before the management anytime, anywhere.

In such cases, uncertainty would definitely affect the demand for the product in the market. This would in turn affect the production of the company. The production of the company determines the capacity of the company, which will also be affected. So, it can be said that as the level of uncertainty increases, the need to make the schedule flexible also rises with the need to increase to a larger capacity.

Verified Answer
Uncertainty affects the demand of a product or service in the market, which in turn affects the volume required and the level of service desired and ultimately defines the capacity requirement of a firm. As the uncertainty increases, a firm needs to be more adaptable in nature to meet the requirement.