Management and Organizational Studies 3330A/B Lecture 4: OPS Week 4

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3330A/B
• Professor: Clarence Borja

Document Summary

Stated relative to some period of time: long range > 1 year. Intermediate range = monthly / quarterly plans: short range < 1 month. Approach to determine overall capacity level of capital-intensive resources to best suppo(cid:396)t (cid:272)o(cid:373)pa(cid:374)(cid:455)"s lo(cid:374)g-range competitive strategy: capital-intensive resources include: facilities, equipment, labour force size, capacity strategy needs to link back to your competitive priority focus! Best operating level = level of capacity for which process was designed, volume of output at which average unit cost is minimized. Shows you how close the firm is to operating at its bol higher numbers are better, as a rule. Economies of scale as plant gets larger and volume increases, average cost / unit of output drops. At some point plant size becomes too large, cost / unit starts to creep up. Goal is to achieve right balance between the two. Firms can use capacity planning as a competitive tool or a strategic differentiator.