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Ch. 5 assignment - John Latus Professor Saffarian MGMT 3413...

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John Latus Professor Saffarian MGMT 3413 1. Contrast design capacity and effective capacity. Design capacity is the maximum rate of output achieved under ideal conditions. (In other words if the world was perfect and no one got sick, machines never broke down, and people purchased your items at exactly the rate you could make them this would be your capacity). Effective capacity is usually less than design capacity owing to realities of changing product mix, the need for periodic maintenance of equipment, lunch breaks, coffee breaks, problems in scheduling and balancing operations, and similar circumstances. 2. List and briefly explain three factors that may inhibit capacity utilization. Facilities - The design, including size and provisions for expansion, locational factors; such as transportation costs, distance to market, labor supply, energy sources, and room for expansion may inhibit capacity utilization. Process Factors- The quantity capability of a process is an obvious determinant of capacity, but so is output quality. If the quality is below standard the rate of output will
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