Capacity

Capacity- The upper limit on the load that an operating unit can handle

Design capacity- Maximum output rate of service capacity an operation, process, or facility is designed for.

Effective Capacity-Design capacity minus allowances such as personal time and maintenance.

Efficiency-Actual output / Effective capacity X 100%

Utilization- Actual output / Design capacity X 100%

Factors

Facilities

1.Design

2.Location

3.Layout

4. Environment

Product/Service

1.Design

2.Product or service mix

Process

1.Quantity capabilities

2.Quality capabilities

Human Factors

1.Job Content

2.Job Design

3.Training and experience

4.Motivation

5.Compensation

6.Learning Rates

7. Absenteeism and labor turnover

Policy

Operational

1.Scheduling

2.Materials Management

3.Quality Assurance

4.Maintenance Policies

5.Equipment Breakdowns

Supply Chain

External Factors

1.Product standards

2.Safety regulations

3.Unions

4.Pollution control standards

Capacity Cushion- Which is an amount of capacity in excess of expected demand when there is some uncertainty about demand

Economies of Scale-If the output rate is less than the optimal level, increasing output decreases unit cost

Diseconomies of Scale- If output is increased beyond optimal level avg unit costs would become larger.

Present Value- Expresses in current value the sum of all future cash flows of an investment proposal

Cash Flow-The diff between cash received from sales and other sources and cash outflow for labor, material, overhead, taxes.

Sensitivity Analysis-Determining the range of probability for which an alternative has the best expected payoff

EVPI-The difference between the expected payoff with perfect information and the expected payoff under risk.

Decision Tree- A schematic representation of the available alternatives and their possible consequences

Maximax-Choose the alternative with the best possible payoff

Laplace-Choose the alternative with the best average payoff of any of the...