{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Lecture03 (6 slides per page)

Lecture03 (6 slides per page) - BUS 105 Production and...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
BUS 105: Production and Operations Management Copyright: Mohsen ElHafsi 2010 BUS 105 BUS 105 Production and Operations Production and Operations Management Management Capacity Capacity Management Management BUS 105: Production and Operations Management Capacity Planning Capacity can be defined as the ability to hold, receive, store, or accommodate it is the upper limit or ceiling on the load that an operating unit can handle Strategic capacity planning is an approach for determining the overall capacity level of capital intensive resources, including facilities, equipment, and overall labor force size The basic questions in capacity handling are: What kind of capacity is needed? How much is needed? When is it needed? BUS 105: Production and Operations Management Importance of Capacity Decisions 1. Impacts ability to meet future demands 2. Affects operating costs 3. Major determinant of initial costs 4. Involves long-term commitment 5. Affects competitiveness 6. Affects ease of management 7. Impacts long range planning BUS 105: Production and Operations Management Capacity Design capacity maximum output rate or service capacity an operation, process, or facility is designed for Effective capacity Design capacity minus allowances such as personal time, maintenance, and scrap Actual output rate of output actually achieved--cannot exceed effective capacity. BUS 105: Production and Operations Management Efficiency and Utilization Actual output = Effective capacity Actual output = Design capacity Efficiency Utilization Both measures expressed as a percentage BUS 105: Production and Operations Management Efficiency/Utilization Example Design capacity = 50 trucks/day Effective capacity = 40 trucks/day Actual output = 36 trucks/day Actual Output 36 units/day Efficiency= = 90% Effective 40 units/day Actual output 36 units/day Utilization= 72% Design capacity 50 units/day
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon