5: Capacity management

Some organizations prefer to delay capacity investment until demand materializes. This  refers to

• Leading strategy

• Following strategy

• Incremental or one-step expansion

Following strategy

• often inhibit growth because adding capacity takes time and customers won’t usually wait

• actually attracts growth of demand

• straddles demand by building capacity that is “average”, sometimes lagging demand and sometimes leading it.

Design capacity

• Is the maximum output rate or service capacity an operation, process, or facility is designed for

• Is the maximum output rate or service capacity an operation, process, or facility is designed for minus allowances such as personal time, and maintenance

• Is the maximum output rate or service capacity an operation, process, or facility is designed for minus minus allowances such as machine breakdowns, absenteeism, shortages of materials

Restaurant`s measures of capacity in inputs are

• Number of tables, seating capacity

• Number of meals served per day

• Number of customers served per day

Capacity planning in the intermediate range assumes that we can

• add equipment, personnel and shifts

• schedule jobs and people, allocate machinery

• add facilities and equipment that have a long lead time

The throughput time is

• the time that the unit spends actually being worked on together with the time spent waiting in a queue  (average time for a unit to move through the system)

• the output rate that the process is expected to produce over a period of time

• the ratio of the total throughput time to the value-added time

The throughput rate is

• the time that the unit spends actually being worked on together with the time spent waiting in a queue  (average time for a unit to move through the system)

• the output rate that the process is expected to produce over a period of time

• the ratio of the total throughput time to the value-added time

The throughput ratio is

• the time that the unit spends actually being worked on together with the time spent waiting in a queue  (average time for a unit to move through the system)

• the output rate that the process is expected to produce over a period of time

• the ratio of the total throughput time to the value-added time

A constraint caused by a process, tool, or person that limits the output of a system is known as

• Break-Even Analysis

• Bottleneck

• Assembly Line Processes

• None of these

Break-Even Analysis is when cost trade-offs are analyzed among the various options to determine which option is best.

•   True

• False