BU385 Study Guide - Midterm Guide: Control Chart, Design Specification, Process Capability
Document Summary
Capacity is the upper limit on the workload that an operating unit can handle. Capacity is also measured as maximum production rate. Alternatively, a major input is used, eg. size. Importance of long-term capacity: impacts ability to meet future demands, affects operating costs, major determinant of initial costs, involves long-term commitment, affects competitiveness. Design capacity: maximum obtainable output under ideal conditions. Effective capacity: maximum capacity given delays, product mix, scheduling difficulties, and other realities. Efficiency is the ratio of actual output to effective capacity. Utilization is the ratio of actual output to design capacity or used time over available time. Products or services: limited menu in a restaurant. Planning and operational: no of shifts per day, inventory, quality control. Minimum cost & optimal operating rate are functions of size of production unit. Economies of scale: fixed costs (facilities, equipment, management) spread out over more units. Diseconomies of scale: worker fatigue, equipment breakdown, less room for error, difficulties in coordination .
