Management and Organizational Studies 3330A/B Lecture Notes - Lecture 9: Absenteeism, Weighted Arithmetic Mean, Capacity Planning
29 Jul 2015
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Document Summary
Capacity can be defined as the maximum output rate that can be achieved by a facility. Capacity planning is the process of establishing the output rate that can be achieved by a facility. Because of the uncertainty of future demand, the overriding capacity planning decision becomes one of whether to purchase a larger facility in anticipation of greater demand or to expand in slightly smaller but less efficient increments. Note that each business can measure capacity in different ways and that capacity can be measured using either inputs or outputs. When a company produces many different kinds of products, input measures work better. When discussing the capacity of a facility, we need two types of information. The first is the amount of available capacity, which will help us understand how much capacity our facility has. The second is effectiveness of capacity use, which will tell us how effectively we are using our available capacity.
