Capacity management, planning and measurement Flashcards
What are the differences between; Capacity Management, Capacity planning and Scheduling
Capacity Management - Long term (3+ years) - Adjusting fixed capital (Buildings and production/service facilities) and fixing overall capacity limits.
Capacity Planning - Intermediate term (3-36 months) - Adjusting capacity within capacity limits set by fixed capital, to cope with demand variability.
Scheduling - Short term (up to 3 months) - Allocating work to processes according to existing capacity limits.
What is capacity?
Capacity is the maximum rate of output that an operation can produce over any given time period, under normal operating conditions.
What are four reasons capacity is difficult to manage?
1) Capacity decisions require long term commitments i.e. large facilities
2) Capacity is usually added in chunks rather than some frequent increments.
3) As capacity decisions often involve substantial financial and other resources, it is necessary to plan for them far in advance.
4) Capacity decisions affect operating costs.
What are five complications in measuring capacity?
1) Capacity depends on the product or service mix.
2) Capacity is influenced by customer behaviour.
3) Capacity depends on the duration over which the output is required.
4) Capacity depends on the specification of the output.
5) Capacity depends on sensitivity to practical problems
What are limitations to capacity measures?
Input or output measures of capacity both have limitations.
The input measure gives no sense of whether the inputs were used efficiently and effectively.
The output measure gives no sense of how much of the potential capacity was used.
What are the differences between; design capacity, effective capacity and achieved capacity?
Design Capacity is the theoretical maximum capacity.
Effective Capacity is the design capacity munis capacity lost through planned maintenance, product changeovers and other required stoppages.
Achieved capacity is effective capacity lost through unplanned events such as machine breakdowns and staff absences.
How do you measure Utilisation rate?
Achieved capacity / Design Capacity
How do you measure the efficiency of the operation?
It is achieved capacity /effective capacity
Explain Overall equipment effectiveness (OEE)
OEE = Availability rate x Performance rate x Quality rate
Availability rate = (total operating time / loading time)
Performance rate = (net operating time / total operating time)
Quality rate = (Valuable operating time / net operating time)
What is a capacity cushion?
It is the gap between maximum capacity and the usual expected capacity that operations plans to maintain.
What are the three capacity strategies?
Leading - Builds capacity in anticipation of future increases in demand
Following - Builds capacity when demand exceeds current capacity
Tracking - Similar to following, except that capacity is built in small increments to just keep pace with increases in demand.
What are the three pure approaches to capacity planning?
Level Capacity Plan - Ignore demand fluctuations and keep nominal capacity levels constant.
Chase Demand Plan - Adjust capacity to resect the fluctuations in demand.
Demand Management - Attempt to change the pattern of demand to better fit with available capacity.
What are two advantages and two disadvantages of a level capacity plan?
Advantages:
Employment is stable, resulting in high staff retention and minimising costs of staff turnover.
High Process utilisation, which in turn can mean high productivity with low unit costs.
Disadvantages:
It can create considerable inventory which has to be financed and stored.
What are four ways to achieve demand management?
- Price differentials
- Constraining customer access
- Market promotions and advertising
- Service differentials
