Having and resourcing a hospital of say 50 beds in a country town where the average bed occupancy is say 6 with a peak of 12 results in a meaningless capacity. Effective Capacity actual capacity to reflect current conditions. Utilisation measures use of resources i.e actual running time. Capacity - Scheduling Relationship capacity limitations can lead to scheduling problems. The economic scale of operation is shown on the following diagram Optimum production for each facility type is shown.
Larger facilities can offer a lower cost for higher capacities up to a point.
These facilities are sensitive to downsizing and will suffer cost penalties as a result. Point E represents idle labour while point D relates to congestion and excessive overtime. The costs for larger facilities are incurred through an increasing distance between the operations and strategic components of the organisation and therefore cost penalties result. Small operations-closer links between strategic decision makers and tactical decision makers. Planning Short term capacity planning is required for demand fluctuations.