Lecture 2: Capacity Planning Flashcards

Question 1

Q

Define capacity.

Answer

A

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

e.g.
- air-conditioner plant - Number of units per week (output)
- Steel mill - Tonnes per hour (output)
- Theatre - Number of seats (input)

Question 2

Q

AC factory has the deluxe model which can be assembled in 1.5 hours, the standard in 1 hour, and the economy in 0.5 hours.

The assembly area in the factory has 800 staff hours of assembly time available each week.

What is the aggregate production capacity of he factiry if the demand for deluxe, standard, and economy units is in the ratio 2:3:2? What if the ratio is 1:2:4?

Answer

A

Capacity = hours available/ hours per unit
For ratio 2:3:2, 7 units take
- 2x1.5 + 3x1 + 2x0.5 = 7 hrs (1 hrs/unit)
- Capacity 800/1 = 800 units
For ratio 1:2:4, 7 units take
- 1x1.5 + 2x1 + 4x0.5 = 5.5hrs (5.5/7 hrs/unit)
- Capacity = 800/5.5 x 7 = 1018 units
Hence mix affects capacity but this is theoretial capacity only.

Question 3

Q

Define utilisation

Answer

A

Measure of the number of % of hours worked by equipment, line, staff, etc.

Question 4

Q

Define efficiency

Answer

A

Comparing actual output to the level of output expected

Question 5

Q

Define capacity planning

Answer

A

The task of setting the effective capacity of the operation so that it an respond to demand.

Question 6

Q

What are the challenges for capacity planning?

Answer

A

Capacity is a soft, malleable constraint - can give people extra shifts/outsourcing.
Capacity is like “black art”; it depends on everything
Capacity frictions: leadtimes, lumpiness, fixed costs
Capacity requires large and irreversible investment
Capacity decisions can be political
Measuing and valuing capacity shortfall is not obvious
Capacity investment involves long-run planning under uncertainty

Question 7

Q

What are the different general capacity decisions?

Answer

A

Sizing: How much capacity to invest in?
Timing: When to increase or reduce resources?
Type: What kinds of resources are best?
Location: Where should resources be located?

Question 8

Q

What are capacity sizing drivers?

Question 9

Q

What is theoretical capacity?

What is acutal capacity?

Answer

A

Theoretical capacity is the maximum posible output rate, whereas the actual capacity is a realistic estimate of the achievable output rate.

Question 10

Q

What are the main difficulties which inhibit perfect utilisation of a manufacturing system, i.e., which restrict capacity are?

Answer

A

Manage
- Lost Time (Planned)
  - Setup times
  - swtichover delays
- Imbalances
  - Bottlenecks
  - Imbalances in task times
Mitigate
- Lost Time (Unplanned)
  - Breakdowns
  - Coordination conflicts (of equipment and labour)
  - Supply shortages
- Reduced Yield
  - Quality
- Variable Conditions
  - Variability in process times causing a build up of inventory
  - Variability in raw material arrivals
  - Variability in order arrivals

Question 11

Q

What are bottlenecks?

Answer

A

Capacity is always restricted by the slowest task, which is called the bottleneck

Question 12

Q

Product 1 follows the route A-B-D and product 2 follows the route A-C-D.
Production is organised so that whenver a batch of product 1 is made, an identical sized batch of product 2 is always made immediately afterwards.
What is the long-run average capacity of the process assumng a batch size of 10 and 100?

Question 13

Q

What are the positive impacts of reducing set-up times?

Answer

A

Smaller batch sizes become economical
Reduced cost of setup labour required
Increase production capacity (on bottlenecks)
Reduce scale of potential quality problems, and hence waste.

Question 14

Q

Question 15

Q

Assume that a process with 100 workstations is making 1000 products and that each process has a probability of 1/1000th of breaking down at any give time.

What is the probability of the process completing a product?

Question 16

Q

Draw a spider diagram showing the different losses in maximum available time, and give the Overall Equipment Effectiveness equation.

Question 17

Q

What is the general method for capacity planning?

Question 18

Q

In long-term capacity planning what are the three basic strategies?

Question 19

Q

What are the four options available for coping with variations in demand(medium-term capacity planning)?

Answer

A

Level capacity plan: processing capacity is set at a uniform level throughout the planning period, regardless of the fluctuations in forecast demand.
Chase Demand plan: attempts to match capacity closely to the varying levels of forecast demand.
Optimal capacity plan: balances the costs of levelling and varying the capacity
Demand management: change demand to suit capacity

Question 20

Q

Illustrate and explain level capacity plan.

Answer

A

Capacity at uniform leel thought the planning period
- Same number of staff operate the same processess
- Finished goods transferred to inventory in anticipation of sales at later time.
- Suitable for non-perishable goods
Advantages:
- Stable employment patterns
- High process utilisation
- High productivity with low unit costs
Disadvantages:
- Considerable inventory costs
- Decision-making: what to produce for inventory vs. immediate sale
- High over/under utilisation levels for service operations.

Question 21

Q

Illustrate the chase demand plan

Question 22

Q

Explain Optimal Capacity Plan

Answer

A

Mathematical programming is used to find the best or optimal solution to a problem that requires.
- A decision or set of decisions about how best to use a set of limited resources in order a state goal of objectives.
A Linear Programming (LP) model seeks to maximise or minimise a linear objective function, subject to a set of linear constraints, by determining values of non-negative real decision variables.