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ISM3600 Ch5 and 5s

# ISM3600 Ch5 and 5s - Ch 5 Capacity Planning Definition...

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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)

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Importance of Capacity Decisions Impacts ability to meet future demands Affects operating costs Major determinant of initial costs Involves long-term commitment Affects competitiveness
Capacity Planning: Measurement Measurement of Capacity: -Measurement in terms of output units -Measurement in terms of input units Example : Input Measure Output Measure . ----------------------------------------------------------------------- Auto manufacturing Labor hours, machine hours Number of cars per shift Steel mill Furnace size Tons of steel per day Restaurant # of tables, # of seats # of meals served per day Theater # of seats available # of tickets sold per performance

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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 achieved--cannot exceed effective capacity. Efficiency = -------------------- Utilization = --------------------- Actual Output Effective capacity 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 = = = 90% Utilization= = = 72% Actual output Effective Capacity 36 40 Actual output Design Capacity 36 50

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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 Attempt to smooth out capacity requirements -uneven capacity requirements -products with complementary demand pattern
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: 2 Consider the a system consisting of two operations performed in a sequence with capacities as shown. --------- -------- A B --------- -------- 13 units/hour 15 units/hour Since A has less capacity than B, the bottleneck operation is A. The system capacity is 13 units/hour.

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Example: 3 Consider the a system consisting of four operations performed in a sequence with capacities as shown. --------- -------- --------- -------- Actual output A B C D 6 units --------- -------- --------- -------- Design Capacity 13 units/hour 15 units/hour 20 units/hour 10 units/hour Effective Capacity 11 units/hour 12 units/hour 15 units/hour 8 units/hour a. Identify the bottleneck operation based on the effective capacities. (D) b. What is the Design capacity of the system? (10 units/hour) c. What is the Effective capacity of the system? (8 units/hour) d. Calculate the utilization of the system (60%) e. Calculate the Efficiency of the system (75%)
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