Note on Capacity Management

by: William Lovejoy

Publication Date: May 14, 2010
Length: 8 pages
Product ID#: 1-429-082

Core Disciplines: Operations Management/Supply Chain

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Teaching Note

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Production capacity can be defined as the maximum rate at which a productive system can convert inputs into outputs. Capacity is typically measured as output per unit of time, that is, as a throughput rate (e.g., tons per hour). Measuring capacity is simplest for a single machine making a single standard product. Most productive systems, however, consist of an assemblage of people and machines acting in concert and may make a portfolio of products. For these more complicated systems, the processing capabilities of the system will depend upon design and control decisions, thus making the measurement of inherent capacity problematic. This note provides a qualitative discussion of the constituents of capacity.

Teaching Objectives

After reading and discussing the material, students should:

  • Describe appropriate business terms and principles
  • Apply critical concepts to define a solution to the case,
  • Successfully articulate data and information in support of the solution proposed,
  • Critically analyze and discuss other responses and solutions to the case,
  • Draw lessons from the case analysis,
  • Generalize the case's teachings to other business challenges and decisions in organizations other than the one analyzed in this case study,
  • Demonstrate leadership and scholarship in analysis.