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Unformatted text preview: Lecture 6  Outline 1 Lecture 6: Capacity Planning (Chapter 6) & Waiting Lines (Supplement C)  Planning LongTerm Capacity  Capacity Timing and Sizing Strategies  A Systematic Approach to LT Capacity Decisions  Why Waiting Lines Form  Uses of WaitingLine Theory  Structure of WaitingLine Problems  Probability Distributions  Using WaitingLine Models to Analyze Operations  Little’s Law  Decision Areas for Management Planning Capacity  Capacity is the maximum rate of output of a process or system  Accounting, finance, marketing, operations, purchasing, and human resources all need capacity information to make decisions  Capacity planning is done in the longterm and the shortterm  Questions involve the amount of capacity cushion and expansion strategies Measures of Capacity Utilization z Output measures of capacity z Input measures of capacity z Utilization Lecture 6  Outline 2 Capacity and Scale  Economies of scale o Spreading fixed costs o Reducing construction costs o Cutting costs of purchased materials o Finding process advantages  Diseconomies of scale o Complexity o Loss of focus o Inefficiencies Capacity Timing and Sizing  Sizing capacity cushions  Capacity cushions are the amount of reserve capacity a process uses to handle sudden changes Capacity cushion = 100% – Average Utilization rate (%) Expansionist strategies  Waitandsee strategies  Combination of strategies Lecture 6  Outline 3 Linking Capacity z Capacity decisions should be linked to processes and supply chains throughout the organization z Important issues are competitive priorities, quality, and process design Systematic Approach 1. Estimate future capacity requirements 2. Identify gaps by comparing requirements with available capacity 3. Develop alternative plans for reducing the gaps 4. Evaluate each alternative, both qualitatively and quantitatively, and make a final choice • Step 1 is to determine the capacity required to meet future demand using an appropriate planning horizon • Output measures based on rates of production • Input measures may be used when • Product variety and process divergence is high • The product or service mix is changing • Productivity rates are expected to change Lecture 6  Outline 4 • Significant learning effects are expected • For one service or product processed at one operation with a one year time period, the capacity requirement, M, is Setup times may be required if multiple products are produced Problem 1 (EXAMPLE 6.1): A copy center in an office building prepares bound reports for two clients. The center makes multiple copies (the lot size) of each report. The processing time to run, collate, and bind each copy depends on, among other factors, the number of pages. The center operates 250 days per year, with one 8hour shift....
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 Fall '10
 Zimmer
 Normal Distribution, Probability theory, Exponential distribution, Capacity utilization, Stockholm Metro

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