DSCI 304 Chapter Notes - Chapter 5: Fixed Cost, Cash Flow, Variable Cost
18 Sep 2016
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Capacity: the upper limit or ceiling on the load that an operating unit can handles. Ex of capacity needs equipment space employee skills. Should capacity be changed all at once, or through several smaller changes. Can the supply chain handle the necessary changes? capacity decisions are strategic. 8 reasons why are capacity decisions so important. Measure capacity in units that do not require updating. Two useful definitions of capacity of the two types of capacity. 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 maintenance. What markers to use to determine you have effective capacity. Factors to consider when deciding between in-house or outsourcing. Take stage of life cycle into account. Take a big-picture approach to capacity changes. Choose a strategy if expansion is involved.
