Capacity Management Flashcards
What is a project
A temporary endeavour undertaken to create a unique product or service
What is capacity
The maximum level of value-added activity over a period of time that the process can achieve under normal operation conditions
What are the challenges for capacity planning
Capacity depends on everything, requires large investment, decisions can be political, involves long-run planning under uncertainty
What restricts capacity
Setup times, bottlenecks, breakdowns, supply shortages, quality issues, variability in process times and arrivals
What is a bottleneck
The slowest task in a system, which the capacity is always restricted by
What are units for process time and setup time
Process time: seconds per product
Setup time: seconds per batch
How to get a balanced operation
Have multiple bottlenecks
What is availability rate (AR)
AR = total operating time / maximum available time
What is performance rate (PR)
PR = net operating time / total operating time
What is quality rate (QR)
QR = valuable op time / net operating time
What is the cause of difference between maximum available time and total operation time
Availability losses - setup, breakdown failures
What is the cause of the difference between total operating time and net operating time
Speed losses - equipment idling, slow running equipment
What is the cause of the difference between net operating time and valuable op time
Quality losses
What is the overall equipment effectiveness (OEE)
OEE = AR x PR x QR = valuable op time / maximum available time
What are the three basic long-term capacity planning strategies
Capacity lead, capacity lag and smoothing with inventory
What is capacity lead planning
Capacity always above demand - sufficient capacity to meet demand, capacity cushion, low utilisation, risk of over-capacity
What is capacity lag planning
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
What is smoothing with inventory capacity planning
Stays level with demand, sometimes higher and sometimes lower to the demand line
What are the four medium-term capacity planning options
Level capacity plan, chase demand plan, optimal capacity plan, demand management
What is level capacity planning
Keeps capacity at the same level, regardless of the demand of each unit of time
Advantages and disadvantages of level capacity planning
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
What is chase demand capacity planning
Matching the demand with capacity so little difference between capacity and demand, several orders made
What is demand management for capacity planning
Using price as a controlling mechanism: increase price to reduce demand, reduce price to increase demand
Yield management: overbooking, varying service types
