kr: chapter 8
DESCRIPTION
KR: Chapter 8. Capacity. Chapter Outline. Introduction Measures of capacity Capacity unit Peak capacity vs. effective capacity Bottleneck Economies of scale Diseconomies of scale Capacity strategies. Economies of Scale. Spreading Fixed Costs Reducing Construction Costs - PowerPoint PPT PresentationTRANSCRIPT
KR: Chapter 8
Capacity
Chapter OutlineIntroductionMeasures of capacity
Capacity unitPeak capacity vs. effective capacityBottleneckEconomies of scaleDiseconomies of scaleCapacity strategies
Economies of ScaleSpreading Fixed CostsReducing Construction CostsCutting Costs of Purchased MaterialsFinding Process Advantage
Economies and Economies and Diseconomies of ScaleDiseconomies of Scale
Av
era
ge
un
it c
os
t (d
olla
rs p
er
pat
ien
t)
Output rate (patients per week)
250-bed hospital
750-bed hospital 500-bed
hospital
Diseconomies of scale
Economies of scale
Figure 8.2
Capacity Capacity StrategiesStrategies
Time between increments
Capacity increment
Planned unused capacity
Time
(a) Expansionist strategy
Forecast of capacity required
Ca
pac
ity
Figure 8.3
Capacity Capacity StrategiesStrategies
Time between increments
Capacity increment
Time
Forecast of capacity required
Ca
pac
ity
Planned use of short-term options
(b) Wait-and-see strategy
Figure 8.3
Expansionist StrategyConcept
Large, infrequent jumps in capacityStays ahead of demand
AdvantagesLost sales unlikelyEconomies of scale (construction and learning)Preempt competition
Wait-and-See StrategyConcept
Small, frequent jumps in capacityLags behind demand, relaying on short-term operations
AdvantagesMinimizes riskGreater flexibility
Linking Capacity and Other Decisions• Competitive Priorities• Quality Management• Capital Intensity• Resource Flexibility• Inventory• Scheduling