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Chapter 3 Capacity slides

Chapter 3 Capacity slides - 1 2 Strategic One or more years...

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1. Strategic: One or more years out “Bricks & Mortar” Future technologies 2. Tactical: One year or sooner Workforce level, inventory, etc.
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Capacity Time Days or weeks out Months out Years out Strategic Capacity Planning “Bricks & mortar” decisions High-level planning High risk M&A Tactical Planning • Workforce, inventory, subcontracting decisions • Intermediate-level planning • Moderate risk Planning & Control • Limited ability to adjust capacity • Detailed planning • Lowest risk
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(a) Capacity lead strategy (b) Capacity lag strategy (c) Average capacity strategy (d) Incremental vs. one-step expansion Units Capacity Time Demand Units Capacity Time Demand Units Capacity Time Demand Units Incremental expansion Time Demand One-step expansion
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Leader Demand Excess Capacity Lost Business Laggard
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1. Make or Buy (e.g., subcontracting) 2. One extreme: “Virtual” Business
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Total Cost for Fictional Line: Fixed cost + (Variable unit cost) × (X) = $200,000 + $4X Cost per unit for X=1? X=10,000?
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$0
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