Capacity Decisions Operations Management Assignment Help

Capacity Decisions

The capacity of the production system defines the firm's competitive boundaries. Specifically, it sets the firm's response rate to the market, its cost structure, its workforce composition, its level of technology, its management and staff support requirements, and its general inventory strategy If capacity is inadequate, a company may lose customers through slow service or 'by allowing competitors to enter the market. If capacity is excessive a company may have to reduce its prices to stimulate demand, underutilized its
workforce, carry excess inventory, or seek additional, less-profitable products to stay in business.

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