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Lesson 4 - Capacity Planning Flashcards

(23 cards)

1
Q

Capacity

A

upper limit or ceiling on the load that an operating unit can handle.
Goal: match long-term supply capabilities with predicted
level of long-term demand

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2
Q

Overcapacity

A

too high operating cost

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3
Q

Undercapacity

A

loss of customers, strained resources

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4
Q

Design Capacity

A

maximum output rate an operation /process/facility is designed for. (Under
ideal conditions)

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5
Q

Effective Capacity

A

Design Capacity minus allowances such as personal time (lunch break,…), and maintenance (more realistic)

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6
Q

Actual output

A

cannot exceed effective and is sometimes even lower due to machine breakdowns, quality problems, shortages

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7
Q

Efficiency

A

(Actual Output/Effective Capacity )*100% -> can sometimes be misleading, for
example if effective is low compared to design, you might expect great efficiency while you
don’t use resources very effectively

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8
Q

Determinants of Capacity

A

Facilities (design, location, size and expansion possibility), Products or Services
(standardization & uniformity), Processes (output quality, quantity capability), Human
considerations (motivation, skill & experience required, management policy(overtime)),
operational factors (shortages of components required, scheduling problems), supply chain
(effect on suppliers), external forces (quality & performance standards)

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9
Q

Utilization

A

(Actual Output/Design Capacity)*100% -> increasing utilization depends on
increasing effective capacity through correcting quality problems, improve bottlenecks

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10
Q

Strategy Formulation - Leading

A

build capacity in anticipation of future demand increases (might be good for long
lead times)

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11
Q

Strategy Formulation - Following

A

build capacity when demand exceeds current capacity

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12
Q

Strategy Formulation - Tracking

A

similar but adds capacity in small increments to keep pace with increasing
demand

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13
Q

Forecasting

A

Planning decisions involve short-term (variations in requirements due to seasonal or other
fluctuations) and long-term considerations (level of capacity: facility size)

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14
Q

bottleneck

A

operation in a sequence of operations whose
capacity is lower than capacities of other operations, whose capacity then limits the system’s
capacity

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15
Q

Cost-Volume Analysis

A

focus on relation between cost, revenue and volume of output

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16
Q

Fixed Cost

A

remain constant regardless of volume (heating, rental cost,S&A)

17
Q

Variable Cost

A

vary directly with volume of output (material&labour costs)

18
Q

Break-even-point

A

volume at which TC=TR

19
Q

Indifference point

A

quatitity at which decision maker would be indifferent
between two competing alternatives (where both profits are same)

20
Q

Step costs

A

Costs that increase stepwise as volume increases: possibly
multiple break-even points

21
Q

Total Cost

22
Q

Profit

23
Q

Waiting-Line Analysis

A

Balance costs of having customers wait and cost of providing additional capacity