Premium Essay

Capacity

In: Business and Management

Submitted By hughiel
Words 1450
Pages 6
Capacity- The upper limit on the load that an operating unit can handle
Design capacity- Maximum output rate of service capacity an operation, process, or facility is designed for.
Effective Capacity-Design capacity minus allowances such as personal time and maintenance.
Efficiency-Actual output / Effective capacity X 100%
Utilization- Actual output / Design capacity X 100%
Factors
Facilities
1.Design
2.Location
3.Layout
4. Environment
Product/Service
1.Design
2.Product or service mix
Process
1.Quantity capabilities
2.Quality capabilities
Human Factors
1.Job Content
2.Job Design
3.Training and experience
4.Motivation
5.Compensation
6.Learning Rates
7. Absenteeism and labor turnover
Policy

Operational
1.Scheduling
2.Materials Management
3.Quality Assurance
4.Maintenance Policies
5.Equipment Breakdowns
Supply Chain
External Factors
1.Product standards
2.Safety regulations
3.Unions
4.Pollution control standards
Capacity Cushion- Which is an amount of capacity in excess of expected demand when there is some uncertainty about demand
Economies of Scale-If the output rate is less than the optimal level, increasing output decreases unit cost
Diseconomies of Scale- If output is increased beyond optimal level avg unit costs would become larger.
Present Value- Expresses in current value the sum of all future cash flows of an investment proposal
Cash Flow-The diff between cash received from sales and other sources and cash outflow for labor, material, overhead, taxes.
Sensitivity Analysis-Determining the range of probability for which an alternative has the best expected payoff
EVPI-The difference between the expected payoff with perfect information and the expected payoff under risk.
Decision Tree- A schematic representation of the available alternatives and their possible consequences
Maximax-Choose the alternative with the best...

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