BUSQOM 1070 Chapter Notes - Chapter 7s: Capacity Planning, Fixed Cost, Variable Cost
23 Dec 2018
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Intermediate range (usually 3 to 36 months): we can add equipment, personnel, and shifts; we can subcontract; and we can build or use inventory. Aggregate planning task: short run (usually up to 3 months): primarily concerned with scheduling jobs and people, as well as allocating machinery. Utilization: the percent of design capacity actually achieved: utilization = actual output/design capacity, 2. Efficiency: the percent of effective capacity actually achieved: efficiency = actual output/effective capacity, they key to improving efficiency is often found in correcting quality problems and in effective scheduling, training, and maintenance. Operations management: expected output = effective capacity * efficiency. If the expected output is inadequate, additional capacity may be needed: capacity and strategy, capacity considerations, capacity decisions must be integrated into the organization"s mission and strategy, 4 special considerations for a good capacity decision, 1. Forecast demand accurately: product additions and deletions, competition actions, product life cycle, and unknown sales volumes all add challenge to accurate forecasting: 2.
