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Topic 3 PowerPoint - Topic 3 Capacity Planning For Products...

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Topic 3 Capacity Planning For Products and Services Dr. Bin Jiang Department of Management
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2 MGT 301 by Dr. Bin Jiang Capacity Planning Capacity is the upper limit or ceiling on the load that an operating unit can handle. The basic questions in capacity handling are: What kind of capacity is needed? How much is needed? When is it needed?
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Impacts ability to meet future demands Affects operating costs Major determinant of initial costs Involves long-term commitment Affects competitiveness Affects ease of management Globalization adds complexity Impacts long range planning 3 MGT 301 by Dr. Bin Jiang Importance of Capacity Decisions
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4 MGT 301 by Dr. Bin Jiang Measurements of Capacity Design capacity maximum output rate or service capacity an operation, process, or facility is designed for Effective capacity Design capacity minus allowances such as personal time, maintenance, and scrap Actual output rate of output actually achieved--cannot exceed effective capacity.
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5 MGT 301 by Dr. Bin Jiang Efficiency and Utilization Actual output Efficiency = Effective capacity Actual output Utilization = Design capacity Both measures expressed as percentages
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6 MGT 301 by Dr. Bin Jiang Actual output = 36 units/day Efficiency = = 90% Effective capacity 40 units/ day Utilization = Actual output = 36 units/day = 72% Design capacity 50 units/day Efficiency/Utilization Example Design capacity = 50 units/day Effective capacity = 40 units/day Actual output = 36 units/day
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This note was uploaded on 05/19/2011 for the course MGMT 101 taught by Professor Steinberg during the Spring '11 term at Ill. Chicago.

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Topic 3 PowerPoint - Topic 3 Capacity Planning For Products...

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