OM-Chapter 8 Flashcards
Capacity planning
Capacity
Highest possible perimeter/highest yield value of a specific operation, process or system articulated in a definite unit of time when the said operation, process or system is operating within an ideal environment
Capacity requirements planning
is the process of discerning a firms’s available production capacity and whether it can meet its production goals
Types of capacity planning in OM
-Resource capacity planning
-Project capacity planning
-Team capacity planning
-HR capacity planning
Economies and diseconomies of scale
An increase in the size of the production unit/volume would result in a higher utilization of resources
Reasons:
-Learning by employees
-Fixed cost allocation
-Purchasing cost will increase
-Cost incurred for enlarging facilities
EOS
The larger an org gets the more efficient the business becomes and this therefore leads to lower unit costs
DOS
The larger an org gets the more inefficient it becomes (e.g. problems with coordination and communication) and this leads to an increase in the unit costs
Critical capacity decisions
-To modify and utilize capacity optimally
-Time horizons of decisions
-Long-term(longer than one year)
-Medium term quarterly /monthly basis
-Short term (1-30 days)
Capacity measurement
-Design capacity
-Effective capacity
-Actual capacity
-Output/Input capacity
Establishing capacity
-Facility issues
-Goods and services issues
-Process issues
-Employee issues
-Operational issues
Important capacity decisions
-Maintaining a balance
-Flexibility of the system
-Changes
-Capacity requirements through system
Strategy formulation for capacity planning
Link to organisational vision, mission and capital
Primary considerations
-Construct for transformation
-Technology and capacity for growth
-Best operating level
-Demand estimation accurac
Capacity needs prediction
-Long and short term influences
-Most important -future demand
-Variation in time horizons
-Trends
Five steps for theory of constraints
-Identify: Management and all employees will know exactly what the obstacles are that they face
-Exploit: Strategies must be expounded to conquer them, can manipulate the bottleneck
-Subordinate: The available assets must be clustered around the expounded strategies to eliminate the constraint
-Elevate: The capability of a system or process must be increased
-Repeat :When the constraint has been eliminated, the process has to be repeated to attack another constraint
Bottleneck
A point of congestion in a production system that prevents it from functioning at full speed
Constraint management
-Tangible/non-tangible
-Throughput
-Barriers to the implementation of TOC
-Drum, Buffer and Rome(DBR)
Three major measurable categories through which profitability can be measured
1.Throughput rate
2.Inventory
3.Operating expense
Tangible vs Non-tangible
Tangible constraints can be classified as systems, processes, labor, raw materials and machines
Non-tangible constraints can be training,procedures and drive
Limiting the throughput rate
-Bottlenecks
-A balance should be achieved in the process
-The rate of throughput and the amount of inventory within a process are dictated by bottleneck operation
DBR
Utilisation of DBR will be regulated by the five steps of TOC
