RMG 301 Chapter Notes - Chapter 5: Process Flow Diagram, Capacity Planning, Outsourcing

• School: Ryerson University
• Department: Retail Management
• Course: RMG 301
• Professor: Norman Shaw

Document Summary

Define capacity, explain the importance of long-term capacity, know how to measure capacity, understand two related performance measures, know overall equipment effectiveness, and describe factors influencing effective capacity. Describe the strategic capacity planning process in organizations, know long-term demand patterns and calculate capacity requirements, and discuss major considerations for developing capacity alternatives. Describe the break-even analysis approach for evaluating capacity alternatives, and use it to solve problems. Reasons for capacity planning: changes in demand, changes in technology, changes in the environment, perceived threats or opportunities, overcapacity causes operating costs to be too high, undercapacity causes strained resources and possible loss of customers. The importance of long-term capacity: capacity has a real impact on the ability of the organization to meet future demand for products; capacity essentially limits the rate of output (throughput) possible. Having capacity to satisfy demand allows a company to exploit opportunities: capacity affects operating costs.