Capacity Management Flashcards
1
Q
What is capacity?
A
The maximum level of added value activity (output) over a period of time.
2
Q
What are the 3 types of capacity?
A
- Design capacity
- Effective capacity
- Actual ouput
3
Q
Give 5 reasons as to why a company may not be operating at full capacity.
A
- Demand lower than expected
- Loss in market share
- Recent increase in capacity
- Maintenance and repair (Planned loss)
- Seasonal variation in demand
4
Q
Give 3 possible outcomes of operating at full capacity.
A
- Decline in quality
- Employee dissatisfaction
- Loss of sales
5
Q
What are the 2 main factors to consider when forecasting demand?
A
- Demand volatility (annual, weekly, daily)
2. Demand uncertainty
6
Q
List 3 types of forecasting demand.
A
- Judgement methods (e.g. Panel of experts)
- Market research (e.g. Market testing or survey)
- Time series methods (e.g. Moving Average, Exponential smoothing, etc.)
7
Q
In setting the base level capacity, what 3 factors tend to increase it?
A
- Low fixed costs
- High perishability
- Need for high level of customer service
8
Q
In setting the base level capacity, what 3 factors tend to increase it?
A
- Low fixed costs
- High perishability
- Need for high level of customer service
9
Q
In setting the base level capacity, what 3 factors tend to decrease it?
A
- High fixed costs
- Ability to store output
- *Need for high capacity utilisation
10
Q
Describe the 3 forms of Chase Demand.
A
- Lead: Capacity is increased in advance of demand growth
- Lag: Capacity is increased after demand growth
- Average: Tries to maintain an average capacity regarding demand growth
11
Q
List 3 ways of adjusting capacity for chasing demand.
A
- Changing output rate
- Flexible staffing
- Subcontracting/Temporary staff
12
Q
What are the 4 ways of managing demand?
A
- Constraining customer access
- Price differentials
- Promotion
- Service differentials
