03: Capacity Mgmt Flashcards
Capacity =
- How much can production make in a given time (aka throughput)
- tries to meet demand
Capacity: how much can an operation make? “Capacity determines the rate at which the operation can transform inputs into outputs and the quantity of a product or service that can be delivered within a given time period”
Design Capacity Vs Effective C Vs Actual C
Theoretical if no prod. Losses
Vs Minus planned (=expected) losses (=stoppages)
Vs Minus unplanned losses
C: efficiency
= actual output / effective capacity
C: Utilization
= actual output / design capacity
How add C?
Working on the 4Ms to reduce the capacity constraint = «bottleneck»
=> a new bottleneck will form
Bottleneck control
= make all operations work at the rate dictated by the bottleneck station
Forecasting aspects:
What 2 things?
In which 2 ways, during product life cycle?
Demand n capacity.
First using qualitative, then quantitative methods
5 quantitative demand forecasting from naive to sophisticated:
Time series method=Just looking at past sales data
1- naive: like last period
2- MovAvg
3- exp smoothing (w alpha smoothing parameter)
4- trend projection
5- Causality methods:
- linear n multiple regression
> chk seasonal peaks n random variation components in order to choose best method
3 qualitative methods for demand forecasting:
1- surveys
2- scenario planning
3- Delphi method = iterative expert interviews
Demand forecasting techniques:
Trade-off in choice=
Cost / precision -> choose based on total cost, including cost of lack of precision
(But: If BM = subscription = MTO -> time series are precise)
Forecasting R more precise under 4 conditions:
Short period
Families f items
If often revised
If considering human factors
3 planning time horizons, from near to far
- Short-term planning: up to 3 months
=> reactive, flexible resources eg changing shift patterns - Medium-term planning: between 3 and 12 months
=> hiring new staff or renting new facilities - Long-term planning: over 12 to 18 months
=> operations strategy, eg new processes, technology and skills
Three general planning strategies in the medium term
w instruments used
-
Level production
Use inventory to smooth demand (if product not perishable and not customized) -
Chase demand
Dynamic capacity. Heavy use of forecasting. -
Demand management
Manipulate demand via marketing
+ These strategies are not mutually exclusive, and most organizations use a mix of them, but it is likely that one strategy will dominate.
Little’s law of queing
+ in operations
L = lambda * W
where
L = avg number of people / units in the queue / system
lambda = arrival rate
W = avg waiting time, i.e. time in the queue / system
WIP = throughput * lead time
