Flashcards in Chapter 9 (Capacity) Deck (6)
What is capacity
The maximum output that a business can produce in a given period with the available resource.
Capacity is measured in production units (eg. 1,000 cars per month)
What is Capacity Management?
- Ability to meet customer’s requirement with the available resources (Machine, factory, labour, raw materials etc) at hand
Time and Capacity are 2 main constraints in capacity management
= Number of units a facility can hold, receive, store or produce in a period of time
Design Capacity vs Effective capacity
Design Capacity = maximum output of a system (expressed as rate)
Effective Capacity is the current operating capacity (often lower than design capacity)
- Forecast demand accurately
- Understand the technology and capacity increments
- Find the optimum operating level (volume)
- Break Even Analysis