Operations Management: Sustainability and Supply Chain Management, Twelfth Edition

Capacity

1. LO S7.1 Define capacity

What should be the seating capacity of a concert hall? How many customers per day should an Olive Garden or a Hard Rock Cafe be able to serve? How large should a Frito-Lay plant be to produce 75,000 bags of Ruffles in an 8-hour shift? In this supplement we look at tools that help a manager make these decisions.

After selection of a production process (Chapter 7), managers need to determine ­capacity. Capacity is the “throughput,” or the number of units a facility can hold, receive, store, or ­produce in a given time. Capacity decisions often determine capital requirements and therefore a large portion of fixed cost. Capacity also determines whether demand will be satisfied or whether facilities will be idle. ...