Chapter_5 - MSB 354 5 Strategic Capacity Planning For...

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MSB 354 5 Strategic Capacity Planning For Products and Services 5-1
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Design of Operations System Decisions on Operations System Design Have a strategic significance for business organization. Play an important role in their profitability and their very survival and have long-term effects for an organization. Product and Service Design Strategic Capacity Planning Process Selection Facility Layout Design of Work Systems Location Planning and Analysis 5-2
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5-3 Learning Objectives Explain the importance of capacity planning. Discuss ways of defining and measuring capacity. Describe the determinants of effective capacity. Discuss the major considerations related to developing capacity alternatives. Briefly describe approaches that are useful for evaluating capacity alternatives
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5-4 Capacity Planning Capacity The maximum level of output, an upper limit on the rate of output. The amount of resource inputs. (multiple products/services) The upper bound on the load that an operating unit can handle. - load : # of physical units produced or # of services performed - operating unit: plant, department, workstation, m/c, store, worker Capacity needs also includes Equipment Space Employee skills Processes
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Capacity planning horizon levels Long range: planning time period of one year or longer is needed to provide sufficient time to build a new facility, to expand the existing facility or to move to a new facility due to forecasted changes in demand. Medium range: approximately from one month to six months . At this level of planning, decisions or activities include acquisition of a major piece of machinery and subcontracting . Short range: planning activities on a daily or a weekly basis and are generated as a result of disaggregation of the long or medium range capacity plans. include machine loading and detailed production scheduling. 5-5
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Capacity Planning (con.) GOAL Achieve a match between the long-term supply capability and the predicted level of long-term demand - over-cap: idle time, unused resources, high operating cost - under-cap: back orders, lost sales, unhappy customers * Gap between current and desired capacity means Capacity Unbalance The 3 basic questions in capacity handling What kind of capacity is needed? How much is needed? When is it needed? 5-6
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5-7 fundamental and critical design decision area 1. Has a real impact to meet future demands 2. Affects operating costs: balance cost of over & under 3. Major determinant of initial costs 4. Involve long-term commitment of resources 5. Affects competitiveness: cap. potential, delivery speed 6. Affects ease of management: optimal vs. mismatch 7. Globalization adds importance, complexity 8. Impacts long range planning: substantial resources Importance of Capacity Decisions
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Capacity Measurement There are subtle difficulties in measuring capacity. - different
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Chapter_5 - MSB 354 5 Strategic Capacity Planning For...

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