MGSC 395 EXAM 2 VERIFIED STUDY GUIDE
capacity - Answers - - the maximum rate of output in a process
- goal is to meet customer demand
- too little capacity - missed revenue
- too much - wasting money (company downfall)
Measures of Capacity - Answers - Output: use when the firm uses high volume,
standardized processes, and small number of product
Input: Use when the firm uses low volume, flexible processes, and high number of
product and mix
maximum capacity - Answers - greatest level of output sustainable for a long time
capacity cushion - Answers - - are the amount of reserve capacity a process uses to
handle sudden increases in demand or temporary losses of production capacity
- 100 - Average utilization rate
why do we want capacity cushion? - Answers - - large variation in demand
- changing product mix
- unstable supply chain
- normal operating issues (holidays & vacation)
Capacity Timing and Sizing in advance - Answers - Benefits: faster rate of learning
(learning curve) - send signal to market and competitors that you are "in it to win it"
Risks: covering costs now without additional revenue - sales may not materialize
Capacity Timing and Sizing wait and see - Answers - Benefits: save money now - less
risk if market never materializes - cover short term demand to see what is needed in
long-run
Risks: could lose business to competitor - higher demand could lead to missed
deliveries and customers
customer population - Answers - - an input that generates potential customers
Finite: limited number of customers
Infinite: (Amazon) number is the system does not affect waiting
Waiting Line - Answers - - assume all customers are patient but some will be impatient
(leave or balk)
capacity - Answers - - the maximum rate of output in a process
- goal is to meet customer demand
- too little capacity - missed revenue
- too much - wasting money (company downfall)
Measures of Capacity - Answers - Output: use when the firm uses high volume,
standardized processes, and small number of product
Input: Use when the firm uses low volume, flexible processes, and high number of
product and mix
maximum capacity - Answers - greatest level of output sustainable for a long time
capacity cushion - Answers - - are the amount of reserve capacity a process uses to
handle sudden increases in demand or temporary losses of production capacity
- 100 - Average utilization rate
why do we want capacity cushion? - Answers - - large variation in demand
- changing product mix
- unstable supply chain
- normal operating issues (holidays & vacation)
Capacity Timing and Sizing in advance - Answers - Benefits: faster rate of learning
(learning curve) - send signal to market and competitors that you are "in it to win it"
Risks: covering costs now without additional revenue - sales may not materialize
Capacity Timing and Sizing wait and see - Answers - Benefits: save money now - less
risk if market never materializes - cover short term demand to see what is needed in
long-run
Risks: could lose business to competitor - higher demand could lead to missed
deliveries and customers
customer population - Answers - - an input that generates potential customers
Finite: limited number of customers
Infinite: (Amazon) number is the system does not affect waiting
Waiting Line - Answers - - assume all customers are patient but some will be impatient
(leave or balk)
