capacity planning 091025030548 phpapp01
Post on 18-May-2015
610 Views
Preview:
DESCRIPTION
TRANSCRIPT
1DSC 335, Fall 2009
Capacity Planning – Outline
Estimate capacity required
Capacity and scale
Make-or-buy analysis
Sizing and timing
2DSC 335, Fall 2009
Fundamentals of Capacity Planning
Capacity (or capacity rate): the maximum rate of output of a resource (a process or a system)
Capacity decisions Make or buy Sizing and timing of capacity expansion
3DSC 335, Fall 2009
A Systematic Approach
1. Estimate future capacity requirements
2. Identify gaps by comparing requirements with available capacity
3. Develop alternative plans for reducing the gaps
4. Evaluate each alternative, and make a final choice
4DSC 335, Fall 2009
Determine Capacity Required
To meet future demand over an appropriate planning horizon
Utilization =
Capacity cushions are the amount of reserved capacity a process uses to handle sudden changes Capacity cushion = 100% – Utilization rate (%)
Average output rateCapacity rate
100%
5DSC 335, Fall 2009
Requirement for a resource over a period of one year, M D = demand forecast for the year p = processing time (in hours) per unit of demand N = total # operation hours per year C = capacity cushion (expressed as a percent)
Capacity Required – Single Product/Service
Capacity requirement =
M =D p
N[1 – (C/100)]
Total hours required for a year’s demand
Total hours available from a resource per year, excluding capacity cushion
6DSC 335, Fall 2009
Setup times may be required between production lots
Multiple Products/Services
whereQ =number of units in each lots =setup time (in hours) per lot
M =[D p + (D/Q)*s]product 1 + [D p + (D/Q)*s]product 2 + … + [D p + (D/Q)*s]product n
N[1 – (C/100)]
Capacity requirement =
Processing and setup hours required for year’s demand, summed over all services or products
Hours available from a single resource per year, excluding capacity cushion
7DSC 335, Fall 2009
Example: Estimating Capacity Required
A copy center in an office building prepares bound reports for two clients. The center makes multiple copies (the lot size) of each report. The processing time to run, collate, and bind each copy depends on, among other factors, the number of pages. The center operates 250 days per year, with one 8-hour shift. Management believes that a capacity cushion of 15 percent (beyond the allowance built into time standards) is best. It currently has three copy machines. Based on the following table of information, determine how many machines are needed at the copy center.
Item Client X Client Y
Annual demand forecast (D) 2,000 6,000
Standard processing time (p) 0.5 0.7
Average lot size (Q) 20 30
Standard setup time (s, in hours) 0.25 0.40
8DSC 335, Fall 2009
Make or Buy
If a given increment of capacity must be added “make” – add in-house production capacity “buy” – outsource production
Factors that affect make-buy decision Costs Quality Intellectual property, core competencies, strategic direction Uncertainty in financial markets, Supply chain (risk of disruption, coordination effort, etc.) Flexibility (quantity, technology) Market perception (labeling v. production) Union considerations
9DSC 335, Fall 2009
Break-even Analysis
To find the break-even quantity, Q, at which the total “make” cost equals the total “buy” cost cb = variable cost (per unit) of the buy option
cm = variable cost (per unit) of the make option
F = fixed cost of capacity expansion
Cost
Number of units, x
F
0
Cost to make = F + cmx
Cost to buy = cbx
Q
m bF c Q c Q
10DSC 335, Fall 2009
(cont’d)
The break-even quantity is
If capacity required < Q, then “buy”
If capacity require > Q, then “make”
b m
QF
c c
11DSC 335, Fall 2009
Exercise: Laptop Computer Production
A manufacturer is planning to introduce a new laptop computer. The manufacturer has two options: (i) upgrading an existing capacity and produce in-house (MAKE), and (ii) outsourcing to a supplier (BUY). The costs of the two options are MAKE: $1.2M for upgrading the capacity; $400 per unit for production BUY: the cost per computer (including shipping) will be $500.
1) What is the minimum demand, Q1, that will justify production in-house at unit price $500?
Now, suppose the manufacturer negotiates a price of $450 per unit supplied by the supplier, but with a promise of buying 25,000 or more
2) What’s the manufacturer’s break-even Q2 if the manufacturer were not constrained by this promise? Under this promise, will the manufacturer make or buy if the estimate of the demand is 23,000?
12DSC 335, Fall 2009
Capacity and Scale
Economies of scale Spreading fixed costs Reducing construction costs Cutting costs of purchased materials Finding process advantages
Diseconomies of scale Complexity Loss of focus Inefficiencies
13DSC 335, Fall 2009
250-bed hospital 500-bed
hospital
750-bed hospital
Output rate (patients per week)
Ave
rage
uni
t cos
t (d
olla
rs p
er p
atie
nt)
Economies of scale
Diseconomies of scale
Example: Hospital Capacity Alternatives
14DSC 335, Fall 2009
Capacity Timing and Sizing
Wait-and-see Strategy
Time
Cap
acity
Planned use of short-term options
Time between increments
Capacity increment
Forecast of capacity required
15DSC 335, Fall 2009
(cont’d) Timing and Sizing
Expansionist Strategies
Planned unused capacity
Time
Cap
acity
Forecast of capacity required
Time between increments
Capacity increment
top related