CBMEOM - MODULE 6 Strategic Capacity Planning for Products and Services.docx

DECISIONS, IMPACTING

The strategic implications of capacity _________ can be enormous for an organization, _______ all areas of the organization.

INPUT, CAPACITY

It is extremely important to include ______from operations management people in making ______decisions.

REASONS, TECHNOLOGY

The chief _______ for capacity planning are changes in demand, changes in _________, changes in the environment, and perceived threats or opportunities.

GLOBALIZATION, UNCERTAINTY

___________ has increased the importance and complexity of capacity decisions. Far-flung supply chains and distant markets add to the ___________about capacity needs.

COSTS, REQUIRED

The additional _____would be relatively small compared with those ______ to buy items or subcontract services.

SPECIALIZE, QUALITY

Firms that _______can usually offer higher ________ than an organization can attain itself.

HIGH, BETTER

When demand for an item is _____ and steady, the organization is ______ off doing the work itself.

OUTSOURCING, DISCLOSE

_________ may involve certain risks. One is loss of control over operations. Another is the need to _______ proprietary information.

PRODUCTION, RESULT

If __________________ capabilities are not meeting demand, high costs, strains on resources, and customer loss may ______________.

AVAILABLE,

If an organization has the ______ equipment, skills, and time, it often makes sense to ______an item or perform a service in-house.

CAPACITY PLANNING

is a key strategic component in designing the operations system.

CAPACITY DECISIONS

are important because capacity is a ceiling on output and a major determinant of operating costs.

CAPACITY

Refers to an upper limit or ceiling on the load that an operating unit can handle.

THE GOAL OF CAPACITY PLANNING

is to achieve a match between the long-term supply capabilities of an organization and the predicted level of long-term demand.

THE CHIEF REASONS FOR CAPACITY PLANNING

are changes in demand, changes in technology, changes in the environment, and perceived threats or opportunities.

OUT OF BALANCE

A gap between current and desired capacity will result in a capacity that is

OVERCAPACITY

Causes operating costs that are too high

UNDER-CAPACITY

Causes strained resources and possible loss of customers.

AVAILABLE CAPACITY

If an organization has the available equipment, skills, and time, it often makes sense to produce an item or perform a service in-house.

EXPERTISE

If a firm lacks the expertise to do a job satisfactorily, buying might be a reasonable alternative.

QUALITY CONSIDERATIONS

Firms that specialize can usually offer higher quality than an organization can attain itself. Conversely, unique quality requirements, or the desire to closely monitor quality may cause an organization to perform a job itself.

THE NATURE OF DEMAND

When demand for an item is high and steady, the organization is better off doing the work itself. However, wide fluctuations in demand or small orders are usually better handled by specialists who are able to combine orders from multiple sources, which results in higher volume and tends to offset individual buyer fluctuations.

COST

Any cost savings achieved from buying or making must be weighed against the preceding factors. Cost savings might come from the item itself or from transportation cost savings. If there are fixed costs associated with making an item that cannot be re-allocated if the service or product is outsourced, that has to be recognized in the analysis. Conversely, outsourcing may help a firm avoid incurring fixed costs.

RISK

Outsourcing may involve certain risks. One is loss of control over operations. Another is the need to disclose proprietary information.