BU385 Study Guide - Midterm Guide: Process Capability
Document Summary
Used to reduce costs, gain flexibility, and take advantage of expertise. Capacity: upper limit on the workload that an operating unit can handle o o o. Usually measured as the maximum production rate or throughput. If major output is hard to measure, use a major input instead. Long term: 1 5 years in future (plant size, major machines and equipment) A part or segment can be outsourced, rather than the whole process. Strategic capacity planning: systematic determination of facility and major machine/equipment requirements to meet lt demand for goods and services. Capacity has a real impact on the ability of an organization to meet future demand for products. Ideally capacity and demand requirements are the same. Capacity is usually a major determinant of initial capital cost. Excess capacity (or can add) = may serve as a barrier to entry. Globalization has increased importance and complexity of capacity decisions.
