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Ridham phutela test 1

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TEST -3
30%
Operations management
MAN 1033
Submitted
To:
Prof. Bruce Winder
By:
Ridham Phutela
C0809701
Group 2

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INTRODUCTION
The company is producing floating furniture made in Hawaii for the American and Chinese
markets. Here, the market comprises of two different countries, so therefore, the type and
quantity of furniture should also be diverse. It is very difficult to predict the demand of the
customers but every business should have a proper short-term and long-term capacity
decision plan in order to cope up with the dynamic environment.
Capacity:
It is an average amount of goods produced in a given period of time by a manufacturing
plant to meet an immediate or future customer demand.
Example Our company should produce 500 homogenous pieces in a week to meet the
demand of partner countries.
There are 2 types of capacity decisions which are required to be made by the operations
manager
Short-term capacity decision
Long-term capacity decision
One of the most important concept in production is economies and diseconomies of scale
Economies of scale When a firm increases its output then they achieve a cost
advantage. The greater the quantity of output produced, the lower the per-unit fixed
cost. The advantage arises due to the inverse relationship between per-unit fixed
cost and the quantity produced.
Diseconomies of scale - Diseconomies of scale occur when the long run average
costs of the organization increases. It causes larger organizations to produce goods
and services at increased costs.

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TEST -3 30% Operations management MAN 1033 Submitted To: Prof. Bruce Winder By: Ridham Phutela C0809701 Group 2 INTRODUCTION The company is producing floating furniture made in Hawaii for the American and Chinese markets. Here, the market comprises of two different countries, so therefore, the type and quantity of furniture should also be diverse. It is very difficult to predict the demand of the customers but every business should have a proper short-term and long-term capacity decision plan in order to cope up with the dynamic environment. Capacity: It is an average amount of goods produced in a given period of time by a manufacturing plant to meet an immediate or future customer demand. Example – Our company should produce 500 homogenous pieces in a week to meet the demand of partner countries. There are 2 types of capacity decisions which are required to be made by the operations manager Short-term capacity decision Long-term capacity decision One of the most important concept in production is economies and diseconomies of scale • Economies of scale – When a firm increases its output then they achieve a cost advantage. The greater the quantity of output produce ...
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