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Unformatted text preview: Ch. 5: Capacity Planning Definition: Capacity is the upper limit on the load that an operating unit can handle. The operating unit can be a plant, department, machine, store or a worker . Basic Decisions in Capacity Planning What kind of capacity is needed? (Labor/Technology) How much is needed? (size) When is it needed? (timing) Importance of Capacity Decisions Impacts ability to meet future demands Affects operating costs Involves longterm commitment Capacity Planning: Measurement Measurement of Capacity: Input Measure Measurement in terms of output units Measurement in terms of input units Input Measure Output Measure Auto manufacturing Labor hours per day Number of cars per shift Steel mill Furnace size available per day Tons of steel per day Restaurant # of tables, # of seats per day # of meals served per day Theater # of seats available per day tickets sold per day Design capacity: Maximum obtainable output Effective capacity: Maximum capacity given product mix, scheduling difficulties, and other doses of reality. Actual output: Rate of output actually achievedcannot exceed effective capacity. Efficiency = (Actual Output) / Effective Capacity Utilization = (Actual Output) / Design capacity Example 1: Given the following information compute the efficiency and utilization of the vehicle repair department Design Capacity = 50 trucks per day Effective Capacity = 40 trucks per day Actual Output = 36 trucks per day Efficiency = (Actual Output) / Effective Capacity =36 / 40 = 0.90 or 90% Utilization = (Actual Output) / Design capacity = 36 / 50 = 0.72 or 72% Example 2: Given the following information compute the effective capacity and utilization of a production system Design Capacity = 100 units per day Efficiency = 70% Actual Output = 60 trucks per day Let X denote the Effective Capacity Efficiency = 0.70 = 60 / X; Hence X = 60/0.70 86 Utilization = 60/100 = 0.60 or 60% Developing Capacity Alternatives Design flexibility into systems provision for future expansion possible changes in layout design Take a big picture approach to capacity changes interrelationship between parts of the system bottleneck operation Prepare to deal with capacity chunks  desired capacity and feasible capacity Bottleneck Operation A bottleneck operation is an operation whose capacity in a sequence is lower than the capacity of any other operation in the sequence. As a consequence, the capacity of a bottleneck operation limits the system capacity to the capacity of the bottleneck operation. Example: 3 Consider the a system consisting of two operations performed in a sequence with capacities as shown....
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 Spring '11
 Larkin,M
 Econometrics

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