CAPACITY PLANNING Flashcards
(49 cards)
The upper limit or ceiling on the load that an operating unit can handle.
CAPACITY
What are the types of outputs measured in capacity?
The number of physical units produced (e.g., bicycles assembled per hour) or the number of services performed (e.g., computers upgraded per hour).
What can be considered an operating unit?
A plant, department, machine, store, or worker.
What factors contribute to capacity needs?
Equipment, space, and employee skills.
Is there a single measure of capacity that fits all situations?
No, the measure of capacity must be tailored to the situation.
The maximum output rate or service capacity an operation, process, or facility is designed for.
DESIGN CAPACITY
Design capacity minus allowances such as personal time and preventive maintenance.
EFFECTIVE CAPACITY
What are the three questions in capacity planning?
- What kind of capacity is needed?
- How much capacity is needed to match demand?
- When is capacity needed?
What is the importance of capacity planning?
- Meeting future demand
- Controlling operating costs
- Managing capital investment
- Long-term resource commitment
- Gaining competitive advantage
- Simplifying operations management 7. Responding to global complexity
What is the difference between design capacity and effective capacity?
Design capacity is the maximum rate of output achieved under ideal conditions, while effective capacity is always less than design capacity.
is the ratio of actual output to effective capacity.
Efficiency
is the ratio of actual output to design capacity.
Capacity utilization
How can efficiency be calculated?
Efficiency = (Actual output / Effective capacity) × 100%
How can utilization be calculated?
Utilization = (Actual output / Design capacity) × 100%
What challenges arise in measuring capacity?
- Different interpretations of ‘capacity’ 2. Difficulty in selecting appropriate and consistent measurement units.
What is a preferred approach in complex settings?
Using simple output measures can be misleading; listing capacities by product can work but becomes impractical with many products or changing product mixes.
Given design capacity of 50 trucks per day, effective capacity of 40 trucks per day, and actual output of 36 trucks per day, what is the efficiency?
Efficiency = (36 trucks per day / 40 trucks per day) × 100% = 90%
Given the same values, what is the utilization?
Utilization = (36 trucks per day / 50 trucks per day) × 100% = 72%
What are the determinants of effective capacity?
The determinants of effective capacity include Facilities, Product/Service, Process, Human Factors, Policy, Operational, Supply Chain, and External Factors.
What factors are included under Facilities?
Facilities include Design, Location, Layout, and Environment.
What factors are included under Product/Service?
Product/Service includes Design and Product or Service Mix.
What factors are included under Process?
Process includes Quantity Capabilities and Quality Capabilities.
What factors are included under Human Factors?
Human Factors include Job Content, Job Design, Training and Experience, Motivation, Compensation, Learning Rates, and Absenteeism and Labor Turnover.
What factors are included under Operational?
Operational includes Scheduling, Materials Management, Quality Assurance, Maintenance Policies, and Equipment Breakdowns.
