Exercise 11.5. Flashcards
(11.5.) Permanent Capacity
The reason why this model has been chosen is because this model allows to match the foreseen demand but always having a margin over it. A difference with the method of higher capacity with one step increase is that the extra capacity will be adjusted with different steps as the foreseen demand reaches our capacity, so this strategy will allow to reduce the costs associat-ed with having an excess in the capacity respect to the other. Another important reason for choosing higher capacity with progressive increase is that having capacity over the demand al-lows to overcome deviations of the real demand from the foreseen one, which reduces the ne-cessity of increasing overtime and outsourcing production.
This model would be applied by assuring that the facilities have the manufacturing capabilities for the designed demand. Also, it is important to assure that the production processes can match the new desired capabilities. As the company produces to order, this might mean that we would need to stock some modules to be able to keep up with the customization of the ta-bles.
