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Operations Management: Processes and Supply Chains, 12th Edition by Larry P. Ritzman, Manoj K. Malhotra, Lee J. Krajewski

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A Systematic Approach to Long-Term Capacity Decisions

Long-term decisions for capacity would typically include whether to add a new plant or warehouse or to reduce the number of existing ones, how many workstations a given department should have, or how many workers are needed to staff a given process. Some of these decisions can take years to become operational. Hence, a systematic approach is needed to plan for long-term capacity decisions.

Although each situation is somewhat different, a four-step procedure generally can help managers make sound capacity decisions. (In describing this procedure, we assume that management already performed the preliminary steps of determining the process’s existing capacity and assessing whether its current ...

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