Capacity Q3

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  1. What is Capacity?
    Maximum rate of output
  2. List some measures of capacity?
    • Output: Rates for different products
    • Inputs: Machine hours available, seating capacity, # beds.
  3. List the importance of Capacity Decisions?
    • 1. Impacts ability to meet future demands
    • 2. Affects operating costs (under/over capacity)
    • 3. Major determinant of initial costs
    • 4. Involved long-term commitment
    • 5. Affects competitiveness (del speed/barrier to entry)
    • 6. Affects ease of management (capacity =?demand)
  4. Examples of fluctuating demand?
    • Time of day>>Movies, Bowling alleys
    • Days of week>>Repairing, Painting, U-Haul
    • Times of the month>>Financial Services, Paydays
    • Seasons of the year>>Roofing, income tax
  5. Why is it easier to manage capacity and demand in manufacturing than services?
    • 1. Processing time varies due to customer involvement
    • 2. Intangible service Output (qualitative & subjective)
    • 3. Time perishable capacity
    • 4. Service can't be inventoried
  6. How do you manage capacity and demand?
    • Capacity: What type? (money, time, equipment, human, etc)
    • How Much?
    • When needed?
    • Demand: Forecast
    • Supply: Availability
  7. Types of Capacity?
    • Human
    • -Number, Skills-Level and mix
    • Facilities
    • -Single/multiple, main/satellite
    • Equipment
    • -Computer system
    • -Substitutions, modifications
    • Tools
    • -computerized notifications
    • Money
    • -credit card firms can carry limited receivables
    • Time
    • -Hrs/day, days/week service provided
    • Alternative Sources
    • -subcontract or lease resources
  8. Two Strategies for managing capacity?
    • 1. Lead Strategy (flexibility)
    • -Build in idle capacity
    • -Expand in anticipation of increase in demand
    • (Economics of small increases vs. a large increase FP&L)
    • 2. Lag Strategy (price)
    • -Expand only after capacity has fallen below demand
  9. Capacity increases in _____________?
    Chunks or Increments
  10. Define and Measure Capacity?
    • Design Capacity: maximum obtainable output
    • Effective Capacity: Max capacity given product mix, scheduling difficulties, and other doses of reality
    • Actual output: rate of output actually achieved -cannot exceed effective capacity.
  11. Efficiency ratio?
    Efficiency = Actual Output / Effective Capacity
  12. Utilization Ratio?
    Utilization = Actual Outpu / Design Capacity
  13. Yield Management with Efficiency Utilization
  14. Developing Capacity Alternatives?
    • Do nothing
    • Design flexibility into systems
    • Differentiate between new and mature products or services
    • Take a big picture approach (motel rooms/parking)
    • Prepare to deal with capacity chunks
    • Smooth out capacity requirements
    • Identify optimal operating levels

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Capacity Q3
2010-06-24 17:36:34
Capcity Operations

Capacity Q3
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