A capacity-leading strategy is a proactive approach that adds or subtracts capacity in anticipation of future market demand. It is an aggressive strategy with the objective of improving the service level and decreasing lead time1. An advantage of adopting a capacity-leading strategy is that there issufficient capacity to meet demand, which means that the organization can satisfy customer needs and expectations, as well as capture new market opportunities. A capacity-leading strategy can also help the organization gain a competitive edge by being the first to offer new products or services, or by lowering prices due to economies of scale2.

The other options are not advantages of adopting a capacity-leading strategy. There is not necessarily sufficient demand to consume capacity, which means that the organization may face overcapacity problems, such as high inventory costs, low utilization rates, and reduced profitability3. All demand is not satisfied, and profit is not maximized, because there may be other factors that affect customer satisfaction and profitability, such as quality, price, or service4. Overcapacity problems are not minimized, but rather increased, by adopting a capacity-leading strategy, because the organization may have more capacity than needed if demand does not increase as expected3.

References: CPIM Part 2 Exam Content Manual, Domain 4: Plan and Manage Supply, Section 4.1: Supply Management Concepts and Tools, p. 33-34; Capacity Planning Strategies: Types, Examples, Pros And Cons - Toggl; Lead Capacity Strategy, Lead Demand Strategy - UniversalTeacher.com; Capacity Planning Strategies For End-to-End Supply Chain Profitability; Capacity Planning Strategies: Types, Examples, Pros And Cons - Toggl.