
e Value of Measuring Capacity • 83
be incurred based on each unit sold. Even if you make the assumption that
all or a portion of the overhead is “xed,” this still assumes that labor cost
will vary with each unit sold, and this assumption is simply not true.
If more capacity is required, it should be apparent by a low percent-
age of available capacity. Once a value stream determines how many
resources are needed, it’s quite a simple nancial analysis to determine
its cost: the cost of the machine, of hiring new full-time or temporary
people, or of the number of overtime hours required. None of this is
complicated to calculate.
WRAP-UP
Value strea ...