A. Activity-based management (ABM) is a method used to identify and evaluate activities that a business performs, by using activity-based costing to accomplish a value chain analysis or a re-engineering project. Activity-based costing is a method of describing, measuring, analyzing and communicating business performance. A company that utilizes ABC will also be continuously identifying activities that can be eliminated, as well as ensuring that necessary activities are carried out efficiently. Unnecessary and inefficient activities are non-value added activities, and the cost drivers of those activities need to be reduced or eliminated.

While activity-based management can be used to recommend process performance improvements and to make better strategic decisions, activity-based costing and activity-based management are methods of analyzing a process after it has taken place. They do not provide any information on production constraints or capacity. Therefore, they cannot be used to correct a situation where the supply of a product is not adequate to meet customer demand for that product.

B. Throughput is the amount of product produced and shipped, and the goal is to maximize it. Simply changing the throughput is not adequate, nor is it the first step that managers should take.

C. This is a longer term possibility that should be considered, but it is not the first avenue to explore.

D. The first thing to do when demand exceeds capacity is figure out where the problem is.  A problem cannot be fixed if its source is not known. Identifying the constraint(s) is the first step, i.e., finding out what current processes are limiting the capacity. Only then can management determine how to correct the problem(s).