Unit 15 Factory Capacity

Exercise 1.

Read the text .Ten sentences in the text are unfinished. Choose the correct sentence endings from a to j below.

Manufacturing companies have to make difficult decisions concerning the size of their production capacity. Having a large capacity enables a firm to meet unexpected increases in demand. When there is strong market growth and insufficient capacity you have to move fast: insufficient capacity, leading to a long lead time and slow service, may cause customers to go to other suppliers, and [1]. Furthermore, lost sales and lost market share tend to be irreversible. On the other hand, occasional overdemand has to be balanced against overcapacity, which might lead to under-utilizing the workforce, which is clearly expensive, or make it necessary to reduce prices to stimulate demand, or [2].

Yet most companies budget for a certain capacity cushion – an amount of capacity in excess of expected demand. It is also necessary to plan for occasional downtime, [3].

Capacity can also be affected by external considerations such as government regulations concerning working hours, safety, pollution levels, and so on, trade union agreements, and [4].There are also internal considerations such as the training and motivation of the personnel , the capabilities and reliability of the equipment, the control of materials and quality, and [5].

Producing in large quantities allows a firm to take advantage of quantity discounts in purchasing, and lowers the average fixed cost per unit produced, as each succeeding unit absorbs part of the fixed costs, giving [ 6]. The best operating level is the level of capacity for which the average unit cost is at a minimum, after which there are [7].There are also disadvantages to having large-scale facilities. Finding staff becomes more difficult, and [8 ]. Moreover, the working environment, and consequently industrial relations, are [ 9].

A plant’s ideal capacity is very likely not maximum capacity –e.g. operating 24 hours a day, with three shifts of workers – as this may be inefficient in terms of higher labour costs (shiftwork or overtime payments), [10].

a. allow competitors to enter the market

b.diseconomies of scale

c. economies of scale

d. frequently les good in large factories

e. higher maintenance expenses , and so on

f. the capabilities of the management

g. the capabilities of the suppliers

h. the logistics of material flow become more complicated

i. to produce additional products that are less profitable

j. when production stops because of equipment failures

Exercise 2.

Match up the following collocations from the text.

1.capacity	a.costs
2.expected	b.cushion
3.fixed	c.demand
4.government	d.environment
5.market	e.flow
6. material	f.levels
7.pollution	g.regulations
8.working	h.share