Lecture 3 - BUS 105 Production and Operations Management...

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BUS 105: Production and Operations Management Copyright: Mohsen ElHafsi 2011 1 !"# %&’ ()*+,-./*0 10+ 234)1./*05 610174840. Capacity Management BUS 105: Production and Operations Management !"#"$%&’ )*"++%+, ! 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 2 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 -.#/0&"+$1 /2 !"#"$%&’ 31$%4%/+4 1. Impacts ability to meet future demands 2. Affects operating costs 3. Major determinant of initial costs 4. Involves long-term commitment 3 5. Affects competitiveness 6. Affects ease of management 7. Impacts long range planning BUS 105: Production and Operations Management !"#"$%&’ ! Design capacity " maximum output rate or service capacity an operation, process, or facility is designed for ! Effective capacity 4 " 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 522%$%1+$’ "+6 7&%*%8"&%/+ Actual output = Effective capacity Efficiency 5 Actual output = Design capacity Utilization Both measures expressed as a percentage BUS 105: Production and Operations Management 522%$%1+$’97&%*%8"&%/+ 5:".#*1 Design capacity = 50 trucks/day Effective capacity = 40 trucks/day Actual output = 36 trucks/day 6 Actual Output 36 units/day Efficiency= = 90% Effective 40 units/day Actual output 36 units/day Utilization= 72% Design capacity 50 units/day ! !!
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BUS 105: Production and Operations Management Copyright: Mohsen ElHafsi 2011 2 BUS 105: Production and Operations Management !"#"$%&’(’#) +, -,,".#&/" 0(1(.&#2 ! Facilities ! Product and service factors !
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Lecture 3 - BUS 105 Production and Operations Management...

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