Capacity Planning

Сентябрь 15, 2022

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Capacity Planning

Содержание

2. Structure of topic 1 2 Capacity planning 3 Process Of Capacity Planning 4 The Essence of
3. Manufacturing System Manufacturing systems produce standardized products in large volumes. finite capacity contribute fixed costs variable
4. Service Systems Service systems present more uncertainty with respect to both capacity and costs. services are
5. Capacity definition Capacity is the maximum output rate of a production or service facility Capacity =
6. Measures of capacity Capacity can be difficult to quantify due to … – Day-to-day uncertainties such
7. Measures of capacity
8. Importance of Capacity Decisions Impacts ability to meet future demands Affects operating costs Major determinant of
9. Relationship between Capacity and Output
10. Various Capacities Designed capacity of a facility is the planned or engineered rate of output of
11. Efficiency and Utilization Both measures expressed as percentages
12. Determinants of Effective Capacity Facilities Product and service factors Process factors Human factors Operational factors Supply
13. Capacity Management Goal The objective of capacity management (i.e. planning and control of capacity) is to
14. Capacity Planning Capacity planning is the process used to determine how much capacity is needed (and
15. Three Steps for Capacity Planning Determine Service Level Requirements Analyze Current Capacity Planning for the future
16. How Much Capacity Is Best? The Best Operating Level is the output than results in the
17. Best Operating Level
18. Evaluating Alternatives
19. Evaluating Alternatives
20. Cost-Volume Relationships
21. Break-Even Problem
22. Assumptions of Cost-Volume Analysis One product is involved Everything produced can be sold Variable cost per
23. Evaluating Capacity Alternatives Cost-Volume Formulas TC=FC+(VCxQ) TR=RxQ P=TR–TC P=(RXQ)–[FC+(VCXQ)] Volume=(SP+FC)/(R-VC) QBEP=FC/(R-VC)
24. Process of Capacity Planning Capacity planning is concerned with defining the long-term and the short-term capacity
25. Long-term capacity strategies Long-term capacity requirements are: are more difficult to determine are dependent on marketing
26. Long-range Capacity Decisions Multiple products: Company’s produce more than one product using the same facilities in
27. Short-term capacity strategies Managers looking ahead up to 12 months Fundamental capacity is fixed. Many short-term
28. Types of Short-term Capacity Strategies Inventories: Stock finished goods during slack periods to meet the demand
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Слайд 2

Structure of topic
1
2
Capacity planning
3
Process Of Capacity Planning
4
The Essence of

Capacity

Manufacturing and Service Systems

Слайд 3

Manufacturing System
Manufacturing systems produce standardized products in large volumes.
finite capacity

contribute fixed costs
variable costs are added as labour
productivity is measurable quantity.

Слайд 4

Service Systems
Service systems present more uncertainty with respect to both capacity

and costs.
services are produced and consumed in the presence of the customer
services must be sufficiently flexible to accommodate a highly variable demand
many services involves professional or intellectual services judgments that are not easily standardized.
difficult to accumulate costs and measure the productivity of the services.

Слайд 5

Capacity definition
Capacity is the maximum output rate of a production or

service facility
Capacity = (number of machines or workers)*(number of shifts)*(utilization)*(efficiency)
The basic questions in capacity handling are:
What kind of capacity is needed?
How much is needed?
When is it needed?

Слайд 6

Measures of capacity
Capacity can be difficult to quantify due to …
–

Day-to-day uncertainties such as employee absences, equipment breakdowns, and material-delivery delays
– Products and services differ in production rates (so product mix is a factor)
– Different interpretations of maximum capacity

Слайд 7

Measures of capacity

Слайд 8

Importance of Capacity Decisions
Impacts ability to meet future demands
Affects operating costs
Major

determinant of initial costs
Involves long-term commitment
Affects competitiveness
Affects ease of management
Globalization adds complexity
Impacts long range planning

Слайд 9

Relationship between Capacity and Output

Слайд 10

Various Capacities
Designed capacity of a facility is the planned or engineered

rate of output of goods or services under normal or full scale operating conditions. = maximum obtainable output
System/effective capacity is the maximum output of the specific product or product mix the system of workers and machines is capable of producing as an integrated whole. = expected variations
Actual output – rate of output actually achieved – cannot exceed effective capacity = unexpected variations and demand

Слайд 11

Efficiency and Utilization
Both measures expressed as percentages

Слайд 12

Determinants of Effective Capacity
Facilities
Product and service factors
Process factors
Human factors
Operational factors
Supply chain

factors
External factors

Слайд 13

Capacity Management Goal
The objective of capacity management (i.e. planning and control

of capacity) is to match the level of operations to the level of demand.

Слайд 14

Capacity Planning
Capacity planning is the process used to determine how much

capacity is needed (and when) in order to manufacture greater product or begin production of a new product.

Слайд 15

Three Steps for Capacity Planning
Determine Service Level Requirements
Analyze Current Capacity
Planning for

the future

Слайд 16

How Much Capacity Is Best?
The Best Operating Level is the output

than results in the lowest average unit cost
Economies of Scale:
– Where the cost per unit of output drops as volume of output increases
– Spread the fixed costs of buildings & equipment over multiple units, allow bulk purchasing & handling of material
Diseconomies of Scale:
– Where the cost per unit rises as volume increases
– Often caused by congestion (overwhelming the process with too much work-in-process) and scheduling complexity

Слайд 17

Best Operating Level

Слайд 18

Evaluating Alternatives

Слайд 19

Evaluating Alternatives

Слайд 20

Cost-Volume Relationships

Слайд 21

Break-Even Problem

Слайд 22

Assumptions of Cost-Volume Analysis
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

Слайд 23

Evaluating Capacity Alternatives
Cost-Volume Formulas
TC=FC+(VCxQ)
TR=RxQ
P=TR–TC
P=(RXQ)–[FC+(VCXQ)]
Volume=(SP+FC)/(R-VC)
QBEP=FC/(R-VC)

Слайд 24

Process of Capacity Planning
Capacity planning is concerned with defining the

long-term and the short-term capacity needs of an organisation and determining how those needs will be satisfied.
Capacity requirements can be evaluated from two perspectives—long-term capacity strategies and short-term capacity strategies.

Слайд 25

Long-term capacity strategies
Long-term capacity requirements are:
are more difficult to determine

are dependent on marketing plans, product development and life-cycle of the product.
is concerned with accommodating major changes that affect overall level of the output in long-term.

Слайд 26

Long-range Capacity Decisions
Multiple products: Company’s produce more than one product

using the same facilities in order to increase the profit.
Phasing in capacity: In high technology industries, and in industries where technology developments are very fast, the rate of obsolescence is high. The products should be brought into the market quickly.
Phasing out capacity: The outdated manufacturing facilities cause excessive plant closures and down time.

Слайд 27

Short-term capacity strategies
Managers looking ahead up to 12 months
Fundamental capacity

is fixed.
Many short-term adjustments for increasing or decreasing capacity are possible
Capital-intensive processes depend on physical facilities, plant and equipment.
Short-term capacity can be modified by operating these facilities more or less intensively than normal

Слайд 28

Types of Short-term Capacity Strategies
Inventories: Stock finished goods during slack periods

to meet the demand during peak period.
Backlog: During peak periods, the willing customers are requested to wait and their orders are fulfilled after a peak demand period.
Employment level (hiring or firing): Hire additional employees during peak demand period and layoff employees as demand decreases.
Employee training: Develop multi skilled employees through training so that they can be rotated among different jobs. The multi skilling helps as an alternative to hiring employees.
Subcontracting: During peak periods, hire the capacity of other firms temporarily to make the component parts or products.
Process design: Change job contents by redesigning the job.

Capacity Planning

Содержание

Structure of topic 12Capacity planning 3Process Of Capacity Planning4The Essence of

Manufacturing SystemManufacturing systems produce standardized products in large volumes. finite capacity

Service SystemsService systems present more uncertainty with respect to both capacity

Capacity definitionCapacity is the maximum output rate of a production or

Measures of capacityCapacity can be difficult to quantify due to …–

Measures of capacity

Importance of Capacity DecisionsImpacts ability to meet future demandsAffects operating costsMajor

Relationship between Capacity and Output

Various CapacitiesDesigned capacity of a facility is the planned or engineered

Efficiency and UtilizationBoth measures expressed as percentages

Determinants of Effective CapacityFacilitiesProduct and service factorsProcess factorsHuman factorsOperational factorsSupply chain

Capacity Management GoalThe objective of capacity management (i.e. planning and control

Capacity PlanningCapacity planning is the process used to determine how much

Three Steps for Capacity PlanningDetermine Service Level RequirementsAnalyze Current CapacityPlanning for

How Much Capacity Is Best?The Best Operating Level is the output

Best Operating Level

Evaluating Alternatives

Evaluating Alternatives

Cost-Volume Relationships

Break-Even Problem

Assumptions of Cost-Volume AnalysisOne product is involvedEverything produced can be soldVariable

Evaluating Capacity AlternativesCost-Volume FormulasTC=FC+(VCxQ)TR=RxQP=TR–TCP=(RXQ)–[FC+(VCXQ)]Volume=(SP+FC)/(R-VC)QBEP=FC/(R-VC)

Process of Capacity Planning Capacity planning is concerned with defining the

Long-term capacity strategies Long-term capacity requirements are:are more difficult to determine

Long-range Capacity Decisions Multiple products: Company’s produce more than one product

Short-term capacity strategies Managers looking ahead up to 12 monthsFundamental capacity

Types of Short-term Capacity StrategiesInventories: Stock finished goods during slack periods

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Structure of topic
1
2
Capacity planning
3
Process Of Capacity Planning
4
The Essence of

Manufacturing System
Manufacturing systems produce standardized products in large volumes.
finite capacity

Service Systems
Service systems present more uncertainty with respect to both capacity

Capacity definition
Capacity is the maximum output rate of a production or

Measures of capacity
Capacity can be difficult to quantify due to …
–

Importance of Capacity Decisions
Impacts ability to meet future demands
Affects operating costs
Major

Various Capacities
Designed capacity of a facility is the planned or engineered

Efficiency and Utilization
Both measures expressed as percentages

Determinants of Effective Capacity
Facilities
Product and service factors
Process factors
Human factors
Operational factors
Supply chain

Capacity Management Goal
The objective of capacity management (i.e. planning and control

Capacity Planning
Capacity planning is the process used to determine how much

Three Steps for Capacity Planning
Determine Service Level Requirements
Analyze Current Capacity
Planning for

How Much Capacity Is Best?
The Best Operating Level is the output

Assumptions of Cost-Volume Analysis
One product is involved
Everything produced can be sold
Variable

Evaluating Capacity Alternatives
Cost-Volume Formulas
TC=FC+(VCxQ)
TR=RxQ
P=TR–TC
P=(RXQ)–[FC+(VCXQ)]
Volume=(SP+FC)/(R-VC)
QBEP=FC/(R-VC)

Process of Capacity Planning
Capacity planning is concerned with defining the

Long-term capacity strategies
Long-term capacity requirements are:
are more difficult to determine

Long-range Capacity Decisions
Multiple products: Company’s produce more than one product

Short-term capacity strategies
Managers looking ahead up to 12 months
Fundamental capacity

Types of Short-term Capacity Strategies
Inventories: Stock finished goods during slack periods