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Best operating level  The level of capacity for which the process was designed and the volume of output at which average unit cost is minimized.
Capacity  The amount of output that a system is capable of achieving over a specific period of time.
Capacity cushion  Capacity in excess of expected demand.
Capacity focus  Can be operationalized through the plants-within-plants concept, where a plant has several suborganizations specialized for different products—even though they are under the same roof. This permits finding the best operating level for each suborganization.
Capacity utilization rate  Measures how close a firm is to its best operating level.
Economies of scope  Exist when multiple products can be produced at a lower cost in combination than they can separately.
Strategic capacity planning  Determining the overall capacity level of capital-intensive resources that best supports the company's long-range competitive strategy.







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