Chapter 5 - Strategic Capacity Planning Flashcards
What does capacity planning and analysis involve?
a) Drawing a process flow diagram
b) Determine the quantity of good parts required at each operation while adjusting for scrap loss
c) calculate the required overall equipment effectiveness
d) estimate the demonstrated OEE at each operation
e) ensure that the demonstrated OE is larger than the required OEE
Capacity
The upper limit on the workload that an operating unit can handle.
Operating unit
Plant
Department
Machine
Store
Worker
Why has outsourcing been popularized?
*Reduce costs
*gain flexibility
*take advantage of suppliers’ expertise (quality)
strategic capacity planning
often used to achieve a match between the long-term supply capabilities of an organization and the predicted level of long-term demand.
what are the key questions in capacity planning?
1) What kind of capacity is needed
2) How much is needed to match demand
3) what is it needed?
Design capacity
The maximum output rate or service capacity an operation, process, or facility is designed for
Effective capacity
The maximum output rate that can be sustained given work breaks, scheduling difficulties and expected delays, machine/equipment maintenance, etc.
Efficiency
the ratio of actual output rate to effective capacity. Actual output rate/effective capacity x 100%
Capacity utilization
Actual output rate/Design capacity x 100%
what are the fundamental issues when a trend is identified?
1) how long the trend might persist
2) the slope of trend
3) Approximate length of the cycle
4) amplitude of the cycle
Capacity cushion
Safety capacity
Capacity cushion = capacity - average demand
Optimal Operating level
average cost per unit is the lowest for that production unit
what are the three very important factors in planning service capacity?
1) the potential need to be near customers
2) the inability to store services
3) the degree of volatility of demand
*Convenience for customers is often an important aspect of service
What are the techniques used for evaluation?
1) Break Even Analysis
2) Payback period
3) Net Present Value
