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IT 371 Chapter 4
Exam
15
Business
Undergraduate 3
05/02/2011

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Term
Strategic Capacity Planning
Definition
Determining the overall capacity level of capital-intensive resources that best supports the company's long-range competitive strategy
Term
Capacity
Definition
The amount of output that a system is capable of achieving over a specific period of time
Term
Best Operating Level
Definition
The level of capacity for which the process was designed and the volume of output at which average unit cost is minimized
Term
Capacity utilization rate
Definition
measures how close a firm is to its best operation level. =capacity used/best operation level
Term
economies of scale
Definition
the notion that as a plant gets larger and volume increases, the average cost per unit drops
Term
focused factory
Definition
a facility with a fairly limited set of production objectives. typically the focus would relate to a specific product or product group
Term
Plant within a Plant (PWP)
Definition
A concept that can be used to operationalize a focused factory by designating a specific area in a larger plant
Term
Economies of Scope
Definition
Exist when multiple products can be produced at a lower cost in combination than they can separately
Term
Capacity Cushion
Definition
Capacity in excess of expected demand
Term
Capacity Flexibility
Definition
having the ability to rapidly increase or decrease production levels, or to shift production capacity quickly from one product or service to another
Term
Zero-changeover-time plant
Definition
The ultimate in plant flexibility. Using movable equipment, knockdown walls, and easily accessible and reroutable utilities, such a plant can quickly adapt to change
Term
Considerations in Changing Capacity
Definition
Maintaining system balance, frequency of capacity additions or reductions, and the use of external capacity
Term
Determining capacity requirements
Definition
1. Use forecasting techniques to predict sales for individual products within each product line. 2. Calculate equipment and labor requirements to meet product line forecasts. 3. Project labor and equipment availabilities over the planning horizon
Term
Decision tree
Definition
a schematic model of the sequence of steps in a problem and the conditions and consequences of each step
Term
Service capacity
Definition
more time- and location-dependent, it is subject to more volatile demand fluctuations, and utilization directly impacts service quality
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