RMG 301 Lecture Notes - Lecture 5: Outsourcing

• School: Ryerson University
• Department: Retail Management
• Course: RMG 301
• Professor: Norman Shaw

Document Summary

Example: lecture theatre has 170 seats, 10 seats are in need of repair, 120 students are in the theatre: design capacity example: 170 seats, effective capacity example: 160 seats, utilization = 120/160 = 75% Examples in a retail company of design capacity, effective capacity and utilization: retail company: moxies, design capacity = 10 tables, effective capacity = 2 tables broken therefore, effective capacity = 8, 2/10 = utilization of 50% Remember: the difference between design capacity and effective capacity. Design capacity is the maximum output rate under ideal conditions. Effective capacity is the maximum output rate that can be sustained given work breaks, scheduling difficulties etc. Cushion: reserved for unanticipated events, unexpected demand, cushion % = 100% - resource utilization % Example: class is 100, utilization is 80%, cushion is 20% Used to decide to move to next step. Backward and forward integration: vertical acquiring other companies in the supply chain, backward integration acquiring companies" closer to suppliers.