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is the capability of manufacturing or service resource such as a facility, process, workstation, or piece of equipment to accomplish its purpose over a specified time period.
establishes overall level of productive resources for a firm. Determines which level of capacity to operate at to meet customer demand in a cost efficient manner.
Balancing Capacity and demand
too much capacity-- cost rise
too little capacity -- customers are lsot
capacity increase depends on
volume and certainty of anticipated demand, strategic objectives, cost of expansion and operation
% of capacity held reserve for unexpected occurrences
100% - Averaged resource utilization % = this
a way to achieve economies of scale without extensive investments in facilities and capacity by focsing on narrow range of goods and services, target market segments, and dedicate processes to maximize efficiency and effectiveness
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