Exam 2 Studyguide

Exam 2 Studyguide - 5.1 5.2 5.3 5.4 5.5 5.6 Capacity the upper limit or ceiling on the load that an operating unit can handle Design capacity the

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
5.1. Capacity: the upper limit or ceiling on the load that an operating unit can handle. 5.2. Design capacity: the maximum designed service capacity or output rate 5.3. Effective capacity: design capacity minus personal and other allowances 5.4. Capacity cushion: extra capacity used to offset demand uncertainty 5.5. Long term capacity: needs require forecasting demand over a time horizon and then converting those forecasts into capacity requirements 5.6. Short term capacity: needs are less concerned with cycles or trends with seasonal variations and other variations from average. These deviations are particularly important b/c they can place a severe strain on a system’s ability to satisfy demand at some times and yet result in idle capacity at other times. 5.7. Bottleneck operations: an operation in a sequence of operations whose capacity is lower than that of other operations 5.8. Economies of Scale: if output rate is LESS than optimal level, increasing the output rate results in decreasing average unit costs 5.9. Diseconomies of Scale: If the output rate is MORE than optimal level, increasing the output rate results in increasing average unit costs 5.10. Constraint: something that limits the performance of a process or system in achieving its goals. 5.11. Contribution margin: the difference between revenue per unit and variable cost per unit ( R-v) 5.12. Cash Flow: the difference between cash received from sales and other resources, and cash outflow for labor, material, overhead and taxes 5.13. Present value: the sum, in current value, of all future cash flows of an investment proposal 5.14. Internal Rate of Return (IRR): summarizes the initial cost, expected annual cash flows, and estimated future salvage value of an investment proposal is an equivalent interest rate. This method identifies the rate of return that equates the 5.15.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/30/2010 for the course OMIS 430 taught by Professor C.schnieder during the Fall '10 term at S.E. Louisiana.

Page1 / 4

Exam 2 Studyguide - 5.1 5.2 5.3 5.4 5.5 5.6 Capacity the upper limit or ceiling on the load that an operating unit can handle Design capacity the

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online