Linking Capacity and Other Decisions:

Capacity decisions must be very much related to strategies and process throughout the organization. While managers make decisions regarding, resource flexibility, location and inventory, they should consider the effect on capacity cushions. Capacity cushions buffer the organization against uncertainty, as do inventory, resource flexibility, and longer customer lead times. If system is balanced well and a change is made in some other decision area, then the capacity cushion can need change to compensate. The examples of such things with capacity are as follows:

Competitive Priorities

Modification in competitive priorities that emphasizes faster deliveries for a procedure requires a larger capacity cushion to permit for quick response at uneven demand, if holding finished goods inventory is infeasible or uneconomical.

Quality Management

A drive that has attained superior levels of quality permit for a smaller capacity cushion because there shall be less ambiguity caused by yield losses.