In capacity planning, what do capacity utilization and capacity cushion represent and why are both important?

• A. Capacity utilization measures how close actual output is to maximum possible output.
• B. Capacity cushion provides reserve capacity to handle uncertainty.
• C. They are the same concept.
• D. Capacity utilization measures how close actual output is to maximum possible output; capacity cushion provides reserve capacity to handle uncertainty.

Answer: (D)