MIS 373 Lecture Notes - Lecture 4: Fixed Cost, Indian Railways, Outsourcing

• School: University of Arizona
• Department: Management Info Systems Main
• Course: MIS 373
• Professor: Eyran Gisches

Document Summary

The upper limit on the load that an operating unit can handle. Goal of strategic planning long term demand. Achieve a match between long term supply capabilities and the predicted level of. Strained resources and possible loss of customers. Change all at once or over time. Operation in a sequence whose capacity is lower than that of the other operations. Put in 40 hours of work, but only 30 hours are effective and are in the bottleneck operation. Maximum output rate is limited by the bottleneck. Pi: standard processing time for product i. Di: demand for product i during planning horizon. T: processing time available per processor during planning. Vc per unit is the same regardless of volume. Fixed costs do not chnage with volume changes. The revenue per unit is the same regardless of volume. Revenue per unit exceeds variable cost per unit. Quantity = fc / revenue - costs.