Chapter 12 Flashcards
(36 cards)
Hierarchy of Capacity Decisions
Facilities Decisions
Aggregate Planning
Scheduling
Facilities Decisions Characteristics
- 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
Facilities Decisions
When is the capacity needed?
How much total system capacity is needed?
Where should the facilities be located?
How much total system capacity is needed?
How large should each facility be?
What type of facilities are needed?
Factors Affecting Facilities Strategy
Predicted demand Cost of facilities Likely behavior of competitors Business strategy International considerations
Facility Planning Steps
- Develop a capacity measure
- Forecast demand
- Determine facility needs
- Generate alternatives
- Evaluate alternatives
- Decide
- Implement the decision
- Solicit and use feedback to continuously improve the process
Capacity
The maximum possible amount of output per time period
Theoretical capacity primarily determined by:
Capital assets
Labor availability
Actual Capacity:
Subtracts downtime, shift breaks, etc.
Is the capacity that should be used in planning
Capacity Examples
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
Developing A Capacity Measure Potential confounding factors
Aggregation
Normal (sustained) vs.Peak
Service industries
Determine Facility Needs
Time phased
Managerial judgment
Sensitivity (“what if”) analysis
Risk assessment
Begin to address 3 basic questions when determining Facility Needs:
When will additional capacity be needed?
How much additional capacity will be needed?
Where should the additional capacity be located?
Strategies for “Capacity Cushion”
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)
Capacity Cushion =
100% capacity – Utilization level
What is “Optimum” Facility Size?
Economies of scale
Diseconomies of scale
Timing of Facility Additions
Preempt the competition
Wait-and-see strategy
Step 4: Generate Alternatives-Identify specific answers (alternatives) to the three basic questions:
Timing
Capacity
Location
Step 5: Evaluate The Alternatives
Variety of models available to assist the decision-maker
Generally a cost/benefit approach
Facility Location Criteria
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
Step 6: Decide
Managerial judgment, augmented by results from model(s)
Rating Models:Additive
- Identify the sites (communities) you wish to consider (# = n)
- Identify important factors (# = m)
- Assign relative weights to the factors
- For each site, rate them on each factor on a consistent scale
- Multiply the ratings by the corresponding weights and sum for each site
Rating Models:Multiplicative Model
- Identify the sites (communities) you wish to consider (# = n)
- Identify important factors (# = m)
- Assign relative weights to the factors
- For each site, rate them on each factor on a consistent scale
- Ratings are raised to the power represented by the weights (the weights are exponents) and these products are then multiplied together for each site
Aggregate Planning aka
Sales & Operations Planning
