ACC 310F Chapter Notes - Chapter 3: Staples Center, Excess Supply, Shortage
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Ex. reducing prices to stimulate demand, running special promotions, processing special orders, and using extra capacity to make some production inputs in-house (making parts vs. purchasing them from an outside supplier) Ex. increasing prices to take advantage of favorable demand conditions, meeting additional demand by outsourcing production, and altering the product mix to focus on the most profitable ones. Fixed supply of capacity and demand changes. Capacity is the maximum volume of activity that a company can sustain with available resources. Ex. the staples center can seat approximately 20,000. Ex. a printing press can produce approximately 60,000 pages per hour. Organizations make capacity decisions based on the expected volume of operations over a horizon often spanning many years. These actions are not as reversible, because it takes time and effort to prepare for demand (build new stadium, install machine, etc) Fixed capacity and fluctuating demand lead to temporary imbalances.
