chapter 5 Flashcards
capacity
the upper limit or ceiling on the load that an operating unit can handle
strategic capacity planning goal
to achieve a match between the long-term supply capabilities of an organization and the predicted level of long-term demand
design capacity
the maximum output rate or service capacity an operation, process, or facility is designed for
effective capacity
design capacity minus allowances such as personal time and preventive maintenance
efficiency formula
actual output / effective capacity x 100%
capacity utilization formula
actual output / design capacity x 100%
leading capacity
build capacity in anticipation of future demand increases
following capacity
build capacity when demand exceeds current capacity
tracking capacity
adds capacity in relatively small increments to keep pace with increasing demand
capacity cushion
extra capacity used to offset demand uncertainty
= capacity - expected demand
capacity cushion strategy
- created demand uncertainty typically have greater capacity cushions
- orgs that have standard products and services generally have smaller capacity cushions
long-term considerations relate to overall ____ of capacity requirements
level
short-term considerations relate to probable ___ in capacity requirements
variations
bottleneck operation
an operation in a sequence of operations whose capacity is lower than that of the other operations in the sequence
economies of scale
if output rate is less than the optimal level, increasing the output rate results in decreasing average unit costs
