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CH 5 (Capacity Planning)
CH 5 (Capacity Planning)
McGraw-Hill/Irwin
Introduction
After selection of a production process, we need to determine capacity. Capacity: is the throughput, or the number of units a facility can hold, receive, store, or produce in a period of time.
McGraw-Hill/Irwin
Introduction
Capacity determines large portion of the fixed cost. Capacity determines if demand will be satisfied or if facilities will be idle. If the facility is too large, portion of if will set and add cost to existing production. If the facility is too small, customers and perhaps the entire market are lost.
McGraw-Hill/Irwin
Capacity Planning
Capacity
The upper limit or ceiling on the load that an operating unit can handle Capacity needs include
Equipment Space Employee skills
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Capacity
Design capacity
maximum output rate or service capacity an operation, process, or facility is designed for Design capacity minus allowances such as personal time, maintenance, and scrap rate of output actually achieved--cannot exceed effective capacity.
Effective capacity
Actual output
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Efficiency
actual output Efficiency effective capacity
Utilization
actual output Utilizatio n design capacity
Measured as percentages
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