Capacity Management

Question 1

What is a project

Answer 1

A temporary endeavour undertaken to create a unique product or service

Question 2

What is capacity

Answer 2

The maximum level of value-added activity over a period of time that the process can achieve under normal operation conditions

Question 3

What are the challenges for capacity planning

Answer 3

Capacity depends on everything, requires large investment, decisions can be political, involves long-run planning under uncertainty

Question 4

What restricts capacity

Answer 4

Setup times, bottlenecks, breakdowns, supply shortages, quality issues, variability in process times and arrivals

Question 5

What is a bottleneck

Answer 5

The slowest task in a system, which the capacity is always restricted by

Question 6

What are units for process time and setup time

Answer 6

Process time: seconds per product

Setup time: seconds per batch

Question 7

How to get a balanced operation

Answer 7

Have multiple bottlenecks

Question 8

What is availability rate (AR)

Answer 8

AR = total operating time / maximum available time

Question 9

What is performance rate (PR)

Answer 9

PR = net operating time / total operating time

Question 10

What is quality rate (QR)

Answer 10

QR = valuable op time / net operating time

Question 11

What is the cause of difference between maximum available time and total operation time

Answer 11

Availability losses - setup, breakdown failures

Question 12

What is the cause of the difference between total operating time and net operating time

Answer 12

Speed losses - equipment idling, slow running equipment

Question 13

What is the cause of the difference between net operating time and valuable op time

Answer 13

Quality losses

Question 14

What is the overall equipment effectiveness (OEE)

Answer 14

OEE = AR x PR x QR = valuable op time / maximum available time

Question 15

What are the three basic long-term capacity planning strategies

Answer 15

Capacity lead, capacity lag and smoothing with inventory

Question 16

What is capacity lead planning

Answer 16

Capacity always above demand - sufficient capacity to meet demand, capacity cushion, low utilisation, risk of over-capacity

Question 17

What is capacity lag planning

Answer 17

Capacity always below demand and meeting demand at points of production - sufficient demand, no over-capacity risk, high impact of start-up problems, no capacity cushion

Question 18

What is smoothing with inventory capacity planning

Answer 18

Stays level with demand, sometimes higher and sometimes lower to the demand line

Question 19

What are the four medium-term capacity planning options

Answer 19

Level capacity plan, chase demand plan, optimal capacity plan, demand management

Question 20

What is level capacity planning

Answer 20

Keeps capacity at the same level, regardless of the demand of each unit of time

Question 21

Advantages and disadvantages of level capacity planning

Answer 21

Advantages: stable employment patterns, high process utilisation, high productivity with low unit costs

Disadvantages: considerable inventory costs, high over/under utilisation levels for service operations

Question 22

What is chase demand capacity planning

Answer 22

Matching the demand with capacity so little difference between capacity and demand, several orders made

Question 23

What is demand management for capacity planning

Answer 23

Using price as a controlling mechanism: increase price to reduce demand, reduce price to increase demand

Yield management: overbooking, varying service types