Capacity Management Flashcards
What is Capacity Management?
The ability of a system to hold, receive, store, or accommodate a certain amount of output over a specific period
What is considered Long-Range?
1+ years
Strategic decisions on facilities, equipment, and labor
What is considered Intermediate-Range?
6–18 months
Monthly or quarterly adjustments
What is considered Short-Range?
Less than 1 month
Tactical adjustments to meet demand
What is Strategic Capacity Planning?
Determines long-term levels of capacity-intensive resources
Affects response time, costs, inventory, and staffing
What is Capacity Utilization Rate?
a measure of how close the firm is to its best possible operating level
capacity used / best operating level
What is economies of scale?
the idea that as a plant gets larger and volume increases, the average cost per unit decreases
What are diseconomies of scale?
at some point, the plant becomes too large and average cost per unit being to increase
What is Capacity Focus?
A facility should specialize in a limited set of production objectives
What is Capacity Flexibility?
The ability to quickly increase, decrease, or shift production
What are Flexible Plants?
Can be adapted quickly with zero-changeover time
What is a Flexible Processes?
Use simple, easily reconfigurable equipment
What are Flexible Workers?
Employees trained in multiple skills to switch tasks efficiently
What are Considerations When Changing Capacity?
Maintaining System Balance
Frequency of Capacity Additions
External Capacity Sources
Decreasing Capacity
What is Maintaining System Balance?
Ensuring similar capacity across operations and managing bottlenecks
How do you Determine Capacity Requirements?
Using forecasts to predict future sales
Calculating labor and equipment needs based on forecasts
Projecting labor and equipment availability over time
What are the main differences between Manufacturing and Service Capacities?
Goods can be stored for later use; Services must be available on demand.
Goods can be shipped to other locations; Services must be delivered at customer demand points.
Demand is relatively stable; Demand for services is highly volatile.
What is Sales & Operations Planning (S&OP)?
A process that helps firms align production and sales strategies
What is the Chase Demand strategy?
Adjust production to match demand fluctuations
What is the Yield Management strategy?
Pricing strategies to optimize revenue based on demand variations
