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BI 326-Sarah > Chapter 12 > Flashcards

Chapter 12 Flashcards

1
Q

Hierarchy of Capacity Decisions

A

Facilities Decisions
Aggregate Planning
Scheduling

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2
Q

Facilities Decisions Characteristics

A
  • Long range planning horizon (2+ years)
  • Time units = years
  • Acquire appropriate levels of plant and equipment
  • Considers acquisition of resources only (no allocation)
  • Often decided by a committee or task force
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3
Q

Facilities Decisions

A

When is the capacity needed?

How much total system capacity is needed?

Where should the facilities be located?

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4
Q

How much total system capacity is needed?

A

How large should each facility be?

What type of facilities are needed?

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5
Q

Factors Affecting Facilities Strategy

A 
Predicted demand
Cost of facilities
Likely behavior of competitors
Business strategy
International considerations
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6
Q

Facility Planning Steps

A
  1. Develop a capacity measure
  2. Forecast demand
  3. Determine facility needs
  4. Generate alternatives
  5. Evaluate alternatives
  6. Decide
  7. Implement the decision
  8. Solicit and use feedback to continuously improve the process
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7
Q

Capacity

A

The maximum possible amount of output per time period

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8
Q

Theoretical capacity primarily determined by:

A

Capital assets

Labor availability

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9
Q

Actual Capacity:

A

Subtracts downtime, shift breaks, etc.

Is the capacity that should be used in planning

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10
Q

Capacity Examples

A

Automobile assembly line ‑ maximum # cars that can be produced per day

Restaurant ‑ seats times optimal turnover rate (within hours of operation)

University ‑ maximum # that could graduate per year

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11
Q

Developing A Capacity Measure Potential confounding factors

A

Aggregation
Normal (sustained) vs.Peak
Service industries

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12
Q

Determine Facility Needs

A

Time phased

Managerial judgment

Sensitivity (“what if”) analysis

Risk assessment

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13
Q

Begin to address 3 basic questions when determining Facility Needs:

A

When will additional capacity be needed?

How much additional capacity will be needed?

Where should the additional capacity be located?

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14
Q

Strategies for “Capacity Cushion”

A

Large cushion (significant capability to handle unanticipated demand, often used with make-to-order)

Small cushion (little capability to handle unanticipated demand, often used with make-to-stock)

Moderate cushion (hybrid approach)

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15
Q

Capacity Cushion =

A

100% capacity – Utilization level

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16
Q

What is “Optimum” Facility Size?

A

Economies of scale

Diseconomies of scale

17
Q

Timing of Facility Additions

A

Preempt the competition

Wait-and-see strategy

18
Q

Step 4: Generate Alternatives-Identify specific answers (alternatives) to the three basic questions:

A

Timing
Capacity
Location

19
Q

Step 5: Evaluate The Alternatives

A

Variety of models available to assist the decision-maker

Generally a cost/benefit approach

20
Q

Facility Location Criteria

A 
Labor (cost, availability)
Raw Materials (cost, availability)
Transportation (cost, access)
Market (customer, competition)
Land and building costs
Taxes (all types)
Community dominance and attitudes
Government regulations
Urban vs.Rural
Technology
21
Q

Step 6: Decide

A

Managerial judgment, augmented by results from model(s)

22
Q

Rating Models:Additive

A
  1. Identify the sites (communities) you wish to consider (# = n)
  2. Identify important factors (# = m)
  3. Assign relative weights to the factors
  4. For each site, rate them on each factor on a consistent scale
  5. Multiply the ratings by the corresponding weights and sum for each site
23
Q

Rating Models:Multiplicative Model

A
  1. Identify the sites (communities) you wish to consider (# = n)
  2. Identify important factors (# = m)
  3. Assign relative weights to the factors
  4. For each site, rate them on each factor on a consistent scale
  5. Ratings are raised to the power represented by the weights (the weights are exponents) and these products are then multiplied together for each site
24
Q

Aggregate Planning aka

A

Sales & Operations Planning

25
Q

Aggregate Planning Characteristics

A

Long range planning horizon (approx. 12 months)

Time units = months

Links Facility Decisions with Scheduling

Considers acquisition and allocation of resources

  • Allocation of plant and equipment (fixed)
  • Acquisition of labor, inventory, outsourcing (variable)

Determine in rough/aggregate terms what will be produced (often using demand for several products aggregated together)

Possibility of influencing both supply and demand

26
Q

4 Steps of Aggregate Planning

A
  1. Forecast demand
    2a. Smooth out demand
    2b. Determine supply options/factors
  2. Develop the aggregate plan
27
Q

Options for Smoothing Demand (Step #2a)

A

Pricing
Advertising and promotion
Backlog or reservation
Development of complementary products

28
Q

Options for Influencing Supply (Step #2b)

A

Hiring, firing, and laying-off of employees

Using overtime and undertime

Using part-time or temporary labor

Carrying inventory

Subcontracting/Outsourcing

Making cooperative arrangements

29
Q

Developing the Aggregate Plan(Step #3) Basic Strategies

A

“Level” strategy (produce at a constant rate)

“Chase” strategy (produce only when there is demand)

30
Q

Aggregate Planning Costs

A

Hiring and firing costs

Overtime and undertime costs

Inventory carrying costs

Subcontracting/Outsourcing costs

Part-time labor costs

Costs of stockouts or back orders

31
Q

Aggregate Planning -Simple Mathematical Model

A

Pt = Pt-1 + A (Ft - Pt-1)

Where:
Pt= Production level (units) in month t
A= Smoothing constant (0 <=1)
Ft= Demand forecast (units) for month t

32
Q

A = 0 

A

Level Strategy

33
Q

A = 1

A

Chase Strategy

34
Q

In Practice these Strategies:

A

Strong tendency to maintain level work force in manufacturing

Service must focus more on demand side, chase strategy

Aggregate planning may get “squeezed out”

  • Model must be tailor-made to company
  • Problem with split responsibility and control
  • Management busy “fighting fires”
35
Q

Transportation Method

A

Special case of linear programming

Used in facility planning to help determine where facilities should be located

Multiple applications, including aggregate planning

Assumes all costs are related linearly to quantities shipped

May factor in any variable costs, revenues, and profit contribution values

36
Q

Other Transportation Method Scenarios

A

Minimum plant utilizations levels
Total Demand > Total Supply
Total Demand = Total Supply

BI 326-Sarah (9 decks)

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