session 3 - tentative

7/31/2019 Session 3 - Tentative

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Dipankar Bose - XLRI

Capacity is the capability of a worker, machine, work

center, plan or organization to produce output per period

of time APICS Dictionary

How to measure the inputs and outputs?

Car manufacturing/ Hospital/ Airline/ Pizza parlor/

Retail store/ Theater/ Restaurant

Basic questions

What type of capacity is needed?

How much is needed?

When is it needed?


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Types

Design Capacity/Best operating level

System capacity/Effective capacity

Actual output

Measure

Throughput Utilization

Efficiency


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Long term capacity management

Intermediate capacity management

Capacity Requirements Planning

Short term capacity control and execution

When compared to expected change in demand

Lead (Expansionist)/ Lag (Wait & See)/ Track


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7/15Dipankar Bose - XLRI

Economies of scale

Diseconomies of scale

Economics of scope

Learning curve Focused factories

Plant within a plant (PWP)

Subcontractor networks

Capacity cushions



1. Estimate future capacity requirements

2. Evaluate existing capacity

3. Identify alternatives

4. Evaluate alternatives5. Select one alternative

6. Implement alternative chosen

7. Monitor results



Mix Proof Bake

Mix Proof Bake

Raw

Materials Work in

Process

Finished

GoodsPack

CTL = Cycle Time/ 100 loaves, Daily available time = 8 hours

CTL =

hrs

CTL =

1 hr

CTL =

hrs

CTL =

hrs

CTL =

hrs

CTL =

1 hr

CTL =

hrs


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Mix Proof Bake

Mix Filling

Fill & Fold Bake

Raw

Materials:

Dough

Work in

Process:

Dough

Finished

GoodsPack

CTC = Cycle Time/ 50 croissants, Daily available time = 8 hours

CTC =

5 min

CTC =

5 min

CTC =

15 min

CTC =

20 min

CTC =

10 min

CTC =

5 min

CTC =

10 min

Raw

Materials:

Fillings

Work in

Process:

Filling


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Current situation

3 flexible machines for Type X with

150,000/year for each machine

Requires 2 operators/MachineNo extra operator

5 flexible machines for Type Y with 250,000/year for each machine

Requires 3 operators/Machine5 extra operator

Demand Forecast (In Thousands)

60 100 150 200 250

100 200 300 400 500

75 85 95 105 120

200 400 600 700 900


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Design flexibility into system

Take stage of life cycle into account

Take System Approach to capacity planning

Prepare to deal with capacity chunks Attempt to smooth out capacity requirements

Identify the optimal operating level

Choose a strategy if expansion is involved


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One product is involved

Everything produced can be sold

Variable cost per unit is the same regardless of volume

Fixed costs do not change with volume Revenue per unit constant with volume

Revenue per unit exceeds variable cost per unit


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ABC Manufacturing intends to increase capacity by

overcoming a bottleneck operation through the addition of

new equipment. Two vendors have presented proposals as

follows:

The price for each product is 20.

What is the breakeven quantity for each proposal?

At what capacity would both plans incur the same cost?

A 50,000 12

B 70,000 10


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Lease extra space temporarily

Authorize overtime

Staff second or third shift with temporary workers

Add weekend shifts Alternate routings, using different work stations that may

have excess capacity

Schedule longer runs to minimize capacity losses

Level output by building up inventory in slack season Postpone preventive maintenance (risky)

Use multi-skilled workers to alleviate bottlenecks

Allow backorders to increase, extend due date promises, or

have stock-outs

Subcontract work

session 3 - tentative

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