SCM 372 Lecture Notes - Lecture 5: Experience Curve Effects, Outsourcing, Capacity Utilization

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Capacity can be defined as the ability to hold, receive, store, or accommodate. Strategic capacity planning is an approach for determining the overall capacity level of capital intensive resources, including facilities, equipment, and overall labor force size. Capacity of an activity or process is set by the physical limits of its resources. Capacity used rate of output actually achieved (cid:862)capacity rati(cid:374)g(cid:863) (cid:894)a. k. a. (cid:862)best operati(cid:374)g level(cid:863)(cid:895) has multiple definitions capacity for which the process was designed. Benchmark rate for the size and type of facility. Which is (cid:862)correct(cid:863)? theoretical maximum output for current workforce size. During one week of production, a plant produced 83 units of a product. The plant was originally designed to produce 100 units/week on a 2-shift operation. Later, a 3rd shift was added to boost production to 150 units/week. Its historic highest production recorded was 120 units/week.

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