Chapter 4 Strategic Capacity Management

Question 0

Capacity

Answer 0

The amount Of output that a system is capable of achieving over a specific period of time

Question 1

Strategic capacity planning

Answer 1

Determining the overall capacity level of capital-intensive resources that best supports the company’s long range competitive strategy

Question 2

Best operating level

Answer 2

The level of capacity for which the process was designed and the volume of output at which average unit cost is minimized.

Question 3

Capacity utilization rate

Answer 3

Measures how close a firm is to its best operating level

Question 4

Economies of scale

Answer 4

The notion is that as a plant gets larger and volume increases the average cost per unit drops

Question 5

Focused factory

Answer 5

A facility with a fairly limited set of production objectives. Typically the focus would relate to a specific product or product group

Question 6

Plant within a plant (PWP)

Answer 6

A concept that can be used to operationalize a focused factory by designating a specific area In a larger plant

Question 7

Economies of scope

Answer 7

Exist when multiple products can be produced at a lower cost in combination than they can separately

Question 8

Capacity cushion

Answer 8

Capacity in excess of expected demand