Premium Essay

Capacity Planning

In: Other Topics

Submitted By promooscar
Words 3043
Pages 13
CAPACITY PLANNING

Measures of Capacity. No single capacity measure is applicable to all types of situations. Hospitals measure capacity as the number of patients that can be treated per day; a retailer measures capacity as annual sales dollars generated per square foot; an airline measures capacity as available seat-miles (ASMs) per month; a theater measures capacity number of seats; and a job shop measures capacity as number of machine hours. In general, capacity can be expressed in one of two ways: output measures or input measures.

Output measures are the usual choice for facilities that produce standard products in high volumes, in a limited number of models using production processes with rigid flow patterns. Nissan Motor Company states capacity at its Tennessee plant to be 450,000 vehicles per year. The plant produces only one type of vehicle, making capacity easy to measure. However, the Navistar plant in Springfield Ohio produces vehicles that range from heavy-duty trucks to school busses. The inherent variation in production time requirements makes a single figure for capacity much less meaningful.

Input measures are the usual choice for facilities that produce custom products in low volumes using processes with flexible flow patterns. For example, in a photocopy shop, capacity can be measured in machine hours or number of machines. Demand, which invariably is expressed as output rate, must be converted to an input measure. Only after making the conversion can a manager compare demand requirements and capacity on an equivalent basis. For example, the manager of a copy center must convert its annual demand for copies from different clients to the number of machines required.

Utilization. Capacity planning requires knowledge of current capacity and utilization. Utilization, or the degree to which equipment, space, or labor is...

Similar Documents

Premium Essay

Capacity Planning

...CAPACITY PLANNING BECK MANUFACTURING AND PLANT CAPACITY BUS644: OPERATIONS MANAGEMENT KIMBERLY JOHNSON ASHFORD UNIVERSITY MICHAEL SNELL FEBRUARY 3, 2014 Capacity planning is a process used to determine production capacity needed by the organization to meet demands for its products. Capacity can be defined as the measurement of the organization’s ability to provide the demand for services or goods requested in a timely manner. Capacity may also be defined as the maximum rate of production. The decisions of management can affect capacity. Most decisions that affect capacity are increases in time and the quality of preventive maintenance which may increase capacity by reducing unexpected equipment failure and changing production rate. Capacity decisions are critical to the organization’s success because they allocate significant resources to assets that usually cannot be changed easily or economically. Capacity decision is based on the best estimate of the future and should be made so that as much flexibility as possible can be retained. If capacity is not obtain in the proper amount, too much capacity can mean that the organization invested in resources where not needed but if capacity is too small, potential sales and market share are lost. Capacity is the maximum amount of work that the organization is capable of completing in any given period. Effective capacity is the maximum amount of work the organization is capable of completing in a period...

Words: 733 - Pages: 3

Premium Essay

Capacity Planning

...Submitted to: Dr. Maria Monica Costales University of the Cordilleras, 2nd Trimester SY 2013-14 8 November 2013 Capacity Planning Techniques A. Determining Capacity Requirements In determining capacity requirements, we must address the demands for individual product lines, individual plant capacities, and allocation of production throughout the plant network. Typically this is done according to the following steps: 1. Use forecasting techniques to forecast sales for individual products within each product line. 2. Calculate equipment and labor requirements to meet product line forecasts. 3. Project labor and equipment availabilities over the planning horizon. Often the firm then decides on some capacity cushions that will be maintained between the projected requirements and the actual capacity. A capacity cushion is an amount in excess of the expected demand. Positive Capacity Cushion: If the expected annual demand on a facility is $10 million in products per year and the design capacity is $12 million per year, it has a 20% capacity cushion (2/10). A 20% capacity cushion equates to an 83% utilization rate (100%/120%). Negative Capacity Cushion: when a firm’s design capacity is less than the capacity to meet its demand. If a firm has a demand of $12million in product per year but can only produce $10million per year, it has a negative capacity cushion of 20 %. Problem 1.Amiel’sCompany produces two flavors of salad dressings: Ranch and Ceasars.......

Words: 1219 - Pages: 5

Premium Essay

Capacity Planning

...Capacity Planning Capacity planning has seen an increased emphasis due to the financial benefits of the efficient use of capacity plans within material requirements planning systems and other information systems. Insufficient capacity can quickly lead to deteriorating delivery performance, unnecessarily increase work-in-process, and frustrate sales personnel and those in manufacturing. However, excess capacity can costly and unnecessary. The inability to properly manage capacity can be a barrier to the achievement of maximum firm performance. In addition, capacity is an important factor in the organization’s choice of technology. Capacity is usually assumed to mean the maximum rate which a transformation system produces or processes inputs. Sometimes this rate may actually be “all at once”; for instance the capacity of an airplane. A more usable definition of capacity would be the volume of output elapsed time and the production capacity of a facility. Capacity planning is the process used to determine how much capacity is needed (and when) in order to manufacture greater products or begin production of a new product. A number of factors can affect capacity: the number of workers, the number of machines, waste, scrap, defects, errors, productivity, suppliers, government regulations and preventive maintenance. Capacity planning is relevant in both the long term and the short term. However, there are different issues at stake for each. Long Term Capacity Planning Over the......

Words: 527 - Pages: 3

Premium Essay

Capacity Planning

...Strategic Capacity Planning  Learning Objective:  You should be able to: 1. Summarize the importance of capacity planning 2. Discuss ways of defining and measuring capacity 3. Describe the determinants of effective capacity 4. Discuss the major considerations related to developing capacity alternatives 5. Briefly describe approaches that are useful for evaluating capacity alternatives  Capacity Planning  Capacity 1. The upper limit or ceiling on the load that an operating unit can handle 2. Capacity needs include  Equipment  Space  Employee skills  Capacity Planning Questions  Key Questions: 1. What kind of capacity is needed? 2. How much is needed to match demand? 3. When is it needed?  Related Questions: 1. How much will it cost? 2. What are the potential benefits and risks? 3. Are there sustainability issues? 4. Should capacity be changed all at once, or through several smaller changes 5. Can the supply chain handle the necessary changes? 6. Capacity Design capacity  Maximum output rate or service capacity an operation, process, or facility is designed for Effective capacity  Design capacity minus allowances such as personal time, maintenance, and scrap Actual output  Rate of output actually achieved--cannot exceed effective capacity.  Defining and Measuring Capacity  Measure capacity in units that do not require updating  Why is measuring capacity in dollars problematic?  Two useful definitions of......

Words: 641 - Pages: 3

Premium Essay

Capacity Planning

...Capacity Planning: A Tactical Decision with Strategic Impact   The business environment has never been more challenging than it is right now. The speed of change in the marketplace is creating a stress on corporations to respond quickly and effectively. The foundation that is required to react to dynamic changes in supply and demand is based on understanding your supply chain’s capacities. Understanding and then building the infrastructure that provides the needed flexibility and speed requires an in-depth understanding of how capacity impacts your business.   The impact of capacity management is felt throughout the organization, within every element of the supply chain. Supplier capacity can bring production to a standstill. Production capacity is equally important; if the capacity is not great enough to meet peak demand periods and inventory building is not properly planned, customer demand will go unfilled. Distribution capacity, both storage and throughput, ensures delivery of the right product at the right time. Transportation connects all elements of the supply chain; as such, its capacity issues are key, influencing service levels and on-time delivery performance.   Change has become the rule, not the exception. The need for capacity management is measured not in years or quarters but rather in weeks and months. Changes can be brutally fast and without warning. Industry over the past two years has been hit hard with a steep slowdown of their business. ......

Words: 1968 - Pages: 8

Premium Essay

Capacity Needs

...1. Explain the challenge Elizabeth faced in meeting her capacity needs and what she should have considered before moving into the larger facility. Capacity is the maximum output rate that a facility achieves. Planning for capacity needs is essential to the successful operation of a facility for a company. Elizabeth faced challenges because there was no capacity planning, which involves the process of establishing the output rate that can be achieved by a facility. (Reid & Sanders, 2010, pg. 316) If there is no careful planning, there may not be enough output capability to meet customer demands or that there could be too much capacity sitting idle. If a company wants to grow and take full advantage of demand, capacity should be carefully planned. (Reid & Sanders, 2010, pg. 317) A lot of capacity planning and demands relies heavily upon customer demand and knowing how to meet those demands. For example There are several needs that are part of capacity planning that Elizabeth should have considered before making the move to a larger facility. The first that should have been determining the market need of the community. Determining the amount of baked goods that would be sold would have helped her understand the space necessary for purchase. After determining the market need, research on the premises, location, prices, and other pertinent information should be obtained to ensure that the proper capacity is used for the physical premises of Biddy’s Bakery.......

Words: 1067 - Pages: 5

Free Essay

Human Resources

...focus of rehabilitation is restoration of work capacity. Rehabilitation programs that are funded by government or private insurers often have an explicit goal of returning the injured party to previous or comparable levels of employment. In such cases, it is important to identify required job tasks and expected performance levels. Such information creates targeted outcomes for the rehabilitation program. The overall rehabilitation process is guided by the job analysis through a process wherein assessed levels of current functional capacity are compared to the required job performance demands (Loisel et al. 2001). Identified gaps between worker capacity and job demands are then addressed through restorative programs and/or job modification. Work transition planning In rehabilitation the job analysis is used to provide information to match the injured worker with tasks that can be safely performed on initial resumption of duties following an absence or time away from regular duties. The job analysis information serves as the foundation for a graduated work resumption process that optimizes productivity and compliments the rehabilitation program and injury recovery. Regular review of the job analysis is used to identify job demands that are suitable to the worker's capacities throughout the recovery process until the worker resumes the pre-injury job or reaches an optimal level of performance in a different job. Vocational planning Persons with disabilities who have......

Words: 555 - Pages: 3

Premium Essay

961 Beer: Launching a Lebanese Brewing Company

...Developing business in the brewing industry as thousands of tradition, always face of intense competition from existing competitors as well as new entrants. In additional, any manufacturers have difficult in expending production capacities and resources. This report aims to recommend how to continue growing business without compromising on quality in high competitive market and limited production capacities and resources. After four year growth in volume, from 6,000 cases in 2008 to 200,000 cases in 2012, the 961 volume of beer sold increased dozens of times. The various products of 961 beer have presented and its retailers network have expanded to variety channel such as bars, restaurants and local supermarkets, even it opened a beer pub by the company. This pub has been an exciting successful case and also has given hints for next periods. However, the company faced of limited capacity for the production of larger volumes while the team operated in small volume and even a new bottling machine had to be ordered. The company had strategically become one of biggest Lebanese brewing company and had prepared for huge competition from Almaza who is also local company dominated the Lebanese market. In additional, by being acquired by Heineken in 2002, this closet competitor took on hand many advantages in technology, experiences, alternative famous brand from the No. 1 worldwide brewing corporation. While the company has built all things from zero. Its largest early customer......

Words: 404 - Pages: 2

Free Essay

The Policeman of the World

...Political Competency Name Institution Lessons learned about Political Competency from the Documentary, Shameless Propaganda (2013) Political competency is viewed as the capacity to understand what an individual can or cannot control when to take action, which is going against your motive and who you require on your side to push your motive ahead. Political competency relates to having knowledge of how to map the political terrain, get others on your area and lead coalitions. More often than not, political competency is not viewed as a critical core competence that is required by all politicians or leaders within an organization. The documentary “Shameless Propaganda” gives insights of the art of political competence that took place in Canada between 1939 and 1945 (“National Film Board of Canada,” 2014). When you ask fruitful pioneers how they get things going, they'll converse with you about conceptualizing, support, authority, market investigation, and arranging, however they'll infrequently expound on the unending normal micro-legislative issues they participate in. Legislative issues are by all accounts an unthinkable subject in authoritative life-the elephant in the initiative parlor that nobody examines or concedes is there (Golubeva, 2013). Political competence is not fiendishness by result of authoritative life. Being political, in its most appealing light, is being mindful of the hobbies of others, discovering zones of shared view, bringing others on board,......

Words: 1373 - Pages: 6

Premium Essay

Polysar

...of transfers from EROW ? 2. Examine the Actual and Budgeted Fixed Costs of Exhibit 2. Show the calculations used to derive actual and budget: a. Standard b. Cost Adjustments (HINT: the cost adjustment hinges on the answer to question 1b) c. Volume Variance 3. As Choquette, what evidence would you present to the Polysar Board of Directors during the upcoming performance review of NASA Rubber Division. Pay particular attention to questions that may be raised concerning the accuracy and meaning of volume variances. 4. In light of the current compensation plan, what sales and production strategy is Henderson (EROW Division) likely to choose? What would Choquette (NASA Division) prefer? 5. Suppose EROW is operating at capacity and would like to purchase additional rubber. If EROW could buy the rubber from an external source (and not have to purchase it from NASA) , what is the most that EROW would be willing to pay (per tonne)? 6. Compare the profitability (per tonne) of EROW and NASA. How should the company schedule production to insure the highest level of profits to the Rubber Group in...

Words: 287 - Pages: 2

Premium Essay

Mgt 415 Week 5 Assignment Final Paper

...MGT 415 WEEK 5 ASSIGNMENT FINAL PAPER A+ Graded Tutorial Available At: http://hwsoloutions.com/?product=mgt-415-week-5-assignment-final-paper Visit Our website: http://hwsoloutions.com/ Product Description PRODUCT DESCRIPTION MGT 415 Week 5 Assignment Final Paper, Organization and Structure in a Business Setting The circulation focus is an indispensable piece of any association. A DC (Distribution Center) works as a cost focus and does not can produce any benefit all alone’s. The building is given an apportioned plan for the year and is in charge of staying inside the parameters of that funding. Numerous distinctive elements can influence a building’s capacity to effectively meet that funding and gainfulness is one of the greatest ones. Gainfulness clearly drives the quantity of containers that are transformed and the more that are prepared, the better that is for the monetary allowance. Wage hours are additionally specifically affected by benefit. In the event that every colleague has high gainfulness, it will take less wage hours to achieve the volumes than the financial backing considers. There can likewise be a drawback of high gainfulness, as well. The quicker a group ventures to every part of the more potential there is for inefficiencies and wounds. These can really nullify any of the monetary profits acknowledged from the higher profit of the group by adding extra wage hours to settle quality issues and added expenses identified with lost work hours.......

Words: 398 - Pages: 2

Free Essay

Patton Fuller

...With an increase in technological sophistication on the ERP and CRM systems, there is now a growing need to bridge the gap between the services offered by these different software systems. According to one estimate, the tech industry is losing as much as $30 billion every year due to an asynchronous business management system that has not brought the data from ERP and CRM together. Writing for a Forrester Research report, Ray Wang, an analyst with the firm said, “ERP systems provide much-needed internal information that can be shared with new stakeholders. CRM systems provide the entry point for stakeholders to engage with an organization. You can't really have one without the other and be successful in the marketplace”. While businesses have realized this and have continued to invest in both the systems, the problem here is that this is being pursued as an IT challenge and not a business one. Today, ERP and CRM perform two vastly different functions in an organization. While ERP helps in better coordination of material and human resources within the organization, the CRM helps in handling customer accounts and their resource needs with the organization. Consider a pretty basic scenario where one of your customer orders 1000 widgets. Typically, the business takes a purchase order for these 1000 widgets from the customer and transfers this to the production department who then take stock of the current inventory. Depending on this information, they set up additonal......

Words: 591 - Pages: 3

Free Essay

Conservation

...It is learnt that the management is in the process of finalizing the VISION of PSPCL and one of the mission identified is to "attain 10,000 MW Power Generation in the state by 2020". Presently, the total installed capacity of share is 4878 MW and PS has signed PPAs with private companies setting up plants at Goindwal Sahib (540MW), Talwandi Sabo(1980 MW), Rajpura (1400 MW)and with NTPC (2640 MW with PSPCL share of 1320 MW). So the total installed capacity in the state by the end of 2014-15 is expected to be 9118 MW. In addition, has signed MOUs with private companies for setting up thermal plants in the state of more than 5000 MW capacity. In addition, presently P has allocation of 1840 MW from central sector plants which is expected to cross 470 MW in the next 5 years. As there is no difference between the powers contracted on long term basis with plants set up outside the state either by central sector or private sector companies and the PPAs signed for procurement of power with private companies setting up plants in the state so mission appears to have been secured well before 2015 without investing even a penny in any project. The question is what will be doing in the next 5 years whereas generation is concerned? In the past, the management of repeatedly argued in favour of setting up plants under state sector and has mentioned it many a times that "setting up of thermal plants in the state sector is in the interest of the state" but surprisingly this......

Words: 350 - Pages: 2

Premium Essay

Bayonne Packaging

...Amsterdam MBA Operations & Supply Chain Management Bayonne Packaging, Inc. HBS brief case 4420 March 5, 2013 Gulcin Askin Michelle Donovan Kivanc Ozuolmez Peter Tempelman 1 The answers in this report relate to the questions given in the document ‘Case 1: Bayonne Packaging, Inc.’ Question 1: Operations Performance of Bayonne Packaging 1A. How would you define the Operations Strategy of Bayonne Packaging? The operations strategy of a company is the prioritization of the five key performance measures: cost, quality, speed, dependability and flexibility. The president of Bayonne Packaging, Inc. indicates that the problems of the company are: they have incurred their first losses since 2001, there are complaints about quality and they are delivering late more often. The other department managers, except for the absent Finishing department manager, also indicate to the new vice president of operations that they have problems in their departments that relate to the performance measures dependability, quality and speed. Based on the priorities given by the key personnel of Bayonne Packaging we have determined the operations strategy of Bayonne Packaging to be as follows (key performance measures in descending order of importance: 1. Dependability 2. Quality 3. Speed 4. Costs 5. Flexibility 1B. How can Bayonne Packaging, Inc.’s Operations & Supply Chain performance be quantified? Per Key Performance Measure we have determined the following ways......

Words: 2844 - Pages: 12

Premium Essay

Materials Request

...[pic] [pic] Concepts in Product Design : □ Research & Development □ Reverse Engineering □ Computer Aided Design (CAD) □ Manufacturability □ Robust Design □ Modular Design □ Standardization □ Concurrent Engineering □ Product Life Cycle Concepts in Process Design : □ Types of Processes 1. Continuous Process 2. Semi-continuous (Repetitive/Assembly) Process 3. Intermittent Process a. Batch Process b. Job Shop 4. Projects Process Innovations : Various process innovations, which have changed our life-style: □ Worldwide search and free connectivity of individuals through net surfing. □ ATM = Automated Teller Machine = Any Time Money = All Time Banking □ Customer’s token number display-boards on cash-counters. □ Net-banking & Share-trading through net. □ Issue of Insurance policy through net. □ Auctions, Biddings & Purchases through Credit-cards. □ Laptops & Pen-drives to carry & transfer information. □ Issue of any destination ticket from any railway station & window & Issue of reservation tickets through internet from home with availability of reservation & location details of trains & flights. □ Verification of Insurance cover by police during road checking, to confirm the current policy of the vehicle through SMS to IRDA controlled Global server. □ Use of escalators in Malls, to facilitate free......

Words: 1167 - Pages: 5