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Chapter 5

BUSI 2301 Chapter Notes - Chapter 5: Eval, Decision Theory, Cash Flow

Course Code
BUSI 2301
Inder S Mann

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CHAPTER 5: Strategic Capacity Planning
A. What is capacity?
Upper limit or ceiling on an operating unit
3 basic qs
oWhat kind?
oHow much?
oWhen needed?
B. Measuring capacity
Design capacity: max output
Effective capacity: max cap given product mix, sched difficulties and other doses of
Actual output
Efficiency: actual output/effective cap
Utilization: actual output/ design cap
C. Factors Influencing Capacity
a. Facilities
b. Products or services
c. Human
d. Planning and operational
e. External
Planning process
oForecast demand one to five years ahead
oDetermine capacity req’m
oMeasure the cap now and decide how to bridge the gap
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