sg_ch05 - CHAPTER 5 CHAPTER 5 Facility Capacity, Location,...

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Unformatted text preview: CHAPTER 5 CHAPTER 5 Facility Capacity, Location, and Layout Long-Range Capacity Facility Location Manufacturing Facility Layouts Analyzing Manufacturing Facility Layouts Service Facility Layouts REVIEW s 64 CHAPTER 5 CAPACITY PLANNING Facility planning includes: 1. determining how much long-range production capacity is needed 2. determining when additional capacity is needed 3. determining where the production facilities should be located 4. determining the layout and characteristics of the facilities Reasons why facility-planning decisions are crucial to a company: 1. the capital investment is enormous 2. the long-range strategies are embodied in a firm's facility plans 3. the operating efficiency of operations is dependent on the capacity of the facilities Four activities involved in capacity planning decisions: 1. estimating the capacities of the present facilities 2. forecasting the long-range future capacity needs for all products and services 3. identifying and analyzing sources of capacity to meet future capacity needs 4. selecting from among the alternative sources of capacity. Definition of "production capacity" and "sustainable practical capacity": 1. production capacity -- the maximum production rate of an organization 2. sustainable practical capacity -- that output attained within the normal operating schedule of shifts per day and days per week without bringing in high cost inefficient facilities Factors that make planning for future capacity needs difficult to do: 1. fundamental changes in the economy 2. changes in consumer preferences 3. technological developments 4. demographic shifts 5. changes in government regulations 6. political and military events Four steps in forecasting production capacity: 1. the total demand for a particular product or service from all producers is estimated 2. the market share for a single company is estimated 3. the market share is multiplied times the total demand to obtain estimated demand for a single company 4. product or service demand is translated into capacity needs A capacity cushion provides: 1. extra capacity in case more demand than expected occurs 2. the ability to satisfy demand during peak demand seasons 3. lower production costs 4. product and volume flexibility 5. improved quality of products and services The concept of "time-phasing" of products is: 1. a strategy that can be used to maintain high facility utilization 2. as one product enters the declining phase of its life-cycle, a new product is developed to use the capacity made available by the older product's decline. FACILITY CAPACITY, LOCATION, and LAYOUT 65 Ways to expand long-range capacity: 1. subcontract with other companies 2. acquire other companies, facilities, or resources 3. develop sites, build buildings, buy equipment 4. expand, update, or modify existing facilities 5. reactivate facilities on standby status Ways to reduce long-range capacity: 1. sell off existing facilities, sell inventories, and lay off or transfer employees...
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sg_ch05 - CHAPTER 5 CHAPTER 5 Facility Capacity, Location,...

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