What Factors Should Be Considered When Selecting the Appropriate Capacity

question 54

Essay

What factors should be considered when selecting the appropriate capacity cushion? How does the choice of capacity cushion relate to other decisions in operations management? To other functional areas?

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Definitions:

Economies of Scale

Cost advantages obtained due to the scale of operation, with cost per unit of output generally decreasing with increasing scale.

Side Agreement

A supplemental agreement made in addition to a primary contract or treaty, often outlining specific provisions not covered in the main document.

Union Representation

The act of a labor union acting as an intermediary between its members and their employer, negotiating terms of employment and advocating for workers' rights.

Minimum Wages

The lowest legal salary that employers can pay their workers; it's set by government laws to ensure a basic standard of living.