ITM 410 Lecture 6: ITM410 Chapter 6

• School: Ryerson University
• Department: Information Technology Management
• Course: ITM 410
• Professor: Vanessa Magness

Document Summary

Capacity is the max rate of output of a process or a system. If they miss capacity, they will miss growth / profits. Output measures of capacity are best utilized when applied to individual processes within the firm/ when the firm provides a relatively small number of standardized services and products. Input measures are generally used for low-volume, flexible processes such as those associated with customer furniture making. Utilization: average output rate / max capacity x100% Indicates the need for adding extra capacity or eliminating unneeded capacity. Economies of scale: increasing its output rate can reduce average unit cost of a service/good: fc spread over more units, contraction cost are reduced, cost of purchasing material are cut, process advantage are found. Capacity cushion = 100% - average utilization rate (%) Measure the amount by which the average utilization falls below 100% Id gaps by comparing req with available capacity: estimate future capacity requirements.