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Strategic Capacity Planning
Determine the overall capcity level of captial-intensive resources that best supports the company's long range competitive strategy
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Best operating level
The level of capacity for which the process was designed and the volume of output at which average unit cost is minimized.
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Focused Factory
A facility with a limited set of production objectives.
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Plant within a plant
Designate smaller areas of the plant to serve as a kind of mini-plant for a specific function.
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Capacity Coushin
Capacity in excess of expected demand. This is often expressed as a percentage.
If demand is expected to be 10 million units, and we are expecting to produce 12 million units, we have a 20% capacity cushin.
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Capacity utilization rate
Capacity used / best operating level
e.g.
if the optimum capacity is 500 cars a month and the current production rate is 480 cars a month, the capacity utilization rate is 96%
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Short range management
Less than one month, make changes such as scheduling, personnel transfers and alertantive production routings
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Intermediate range planning
Monthly or quarterly.
Can use alerternatives such as hiring, layoffs, new tools, subcontracting
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Long range planning
greater than one year.
Uses Top management decisions and purchasing and liquidating expensive assets
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Economies of scope
A gain in efficiency by increasing scope size such as combining several product production proccesses together.
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Balanced system
A system where each process has the same number of inputs.
e.g. process 1 produces 90 units an hour, process 2 produces 90 units an hour and so does process 3.
If process 1 produces 80 units an hour and process 2 produces 150 units an hour there is an imbalance.
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Decision tree
A schematic that looks kind of like a family tree that is used to map out possible actions and consequences.
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