how ramping up works
sometimes a company needs to increase its capacity utilization to meet a surge in demand or expected demand in the near term a ramp up typically entails substantial outlays of capital expenditures which are large amounts of spending by a company on physical assets such as property buildings and manufacturing equipment a ramp up in spending can also involve funds being used for technology upgrades as well as investments in hiring staff for an expected increase in sales or production as a result a company will usually only consider a ramp up once it has a reasonable degree of certainty about additional demand otherwise if the anticipated demand does not materialize or is below projected levels the company will be saddled with excess inventory and surplus capacity understanding ramping upthe term ramp up can also be applied to a larger than normal increase in expenses alluding to the foregoing if a company states that it will ramp up production of goods it could also say that it will ramp up the purchase of automation equipment to support the planned capacity expansion 