ECON 1 Lecture Notes - Lecture 15: Unnecessary Health Care, Learning Curve
Document Summary
Capacity: the capability of a worker, a machine, to produce output in a time period. Theoretical capacity: the maximum output capability, allowing for no adjustments for preventive maintenance, unplanned downtime, or the like. Rated capacity: the long-term, expected output capability of a resource or system. Virtual supply chain: a collection of firms that typically exists for only a short period. Virtual supply chains are more flexible than traditional supply chains, but they are also less efficient. Indifference point: the output level at which two capacity alternatives generate equal costs. Expected value: a calculation that summarizes the expected costs, revenues, or profits of a capacity alternative, based on several demand levels, each of which has a different probability. The major steps of the expected value approach are: identify several different demand-level scenarios. These scenarios are not meant to identify all possible outcomes.
