C720 Section 4: Process Design, Capacity Planning, and Location Analysis key terms

Assembly line

low variety, high volume products. relatively high fixed costs and low variable costs

Batch flow

describes production process that aggregates similar products together

Capacity

measure of organizations ability to sustainably provide services in timely manner with given resources

Capacity planning

significant capital usually required to build facilities and get equipment to build capacity

Capacity utilization

metric to determine how much capacity is actually being used

capacity utilization= actual output / design capacity

Constraint

any resource whose capacity is less than/equal demand

Continuous flow process

flows in a continuous stream with low variety and high volume

Design capacity

max achievable output of a process based on what a firm can produce under ideal conditions for a short period of time

Economies of scale

ability to produce more goods at lower cost by using same equipment/process

Economies of scope

building necessary volume by producing variety of products

Effective capacity

max capacity given the product mix, equipment changeovers, downtimes

Efficiency rate

achieving an outcome with min amount of effort.

Efficiency = Actual output / effective capacity

Facility location

placement of a facility

Fixed costs (FC)

remain the same in all business conditions

Job shop

facility if general and flexible, can meet variety of needs. higher unit cost

Lag strategy

add capacity once organization is running at full capacity or beyond

Lead strategy

adds capacity with the anticipation of increase in demand

Leverage

making a workforce more productive

Location analysis

analyzing data to assess sustainability of a site

Match strategy

moderate strategy that adds or decreases capacity in small amounts

Process layout

similar equipment is grouped into work center/dept

Process selection

determine the most appropriate method of completing a task: includes technical/engineering and volume/scale issues

Product layout

when equipment that processes products should be arranged so that handling costs aren't excessive

Projects

usually one-of-a-kind operations

System capacity

potential finished goods /service , or extent org can meet customer demand

Theory of constraints (TOC)

5 step thinking process that helps firm achieve optimal throughput, overcoming bottleneck

Total cost= fixed cost + (variable cost)x

VC= variable

x= number of units produced

FC= fixed

TC= total cost

Variable costs

change and can be adjusted