SCM 301 Chapter Notes - Chapter 6: Fixed Cost, Making Money, Decision Tree Learning
Document Summary
Capacity: the capability of a worker, a machine, a work center, a plant, or an organization to produce output in a time period. In making decisions, managers must consider the following: The impact of the supply chain on the organization"s effective capacity. Theoretical capacity: the maximum output capability, allowing for no adjustments for preventive maintenance, unplanned downtime, or the like. Rate capacity: the long-term, expected output capability of a resource or system. Lead capacity strategy: a capacity strategy in which capacity is added in anticipation of demand. First, it ensures that the organization has adequate capacity to meet all demands. Especially important when availability of a product or service is crucial. For new products, being late to the market can mean the difference between success and failure. Lag capacity strategy: a capacity strategy in which capacity is added only after demand has materialized. Ability to put off large investments as long as possible.
