Session 7 - capacity management Flashcards
Capacity management
Focuses on managing operational resources
Capacity can be measured in two ways?
- Output based
2.Input based
Capacity planning
Deciding the overall level of operational resources to support the long term biz strat
Resources
facilities, equipment, and labor force
Decision making in capacity management
To increase or dec capacity
Too low capacity: leads to lost customers, and comp disadv
Too high capacity: leads to high costs, layoffs, or inefficent resource use
Long range > 1 year
Expansion or major strategic decisions
Intermediate range (6-18 months)
Workforce planning, subcontracting, equipment upgrades that can be monthly or quarterly
short range < 1 month
scheduling, shifting changes, maintenance decisions
What is usually the case in capacity management?
To increase which is an expansion is more important but companies can also decrease capacity when demand is reduced.
If you expect strong market growth
Increase capacity
if you expect weak market growth
Do nothing
Forecasted market crash?…
Decrease capacity
Focused factory approach
A production facility should focus on repetition and concentration in one area which allows its workforce and managers to become effective.
Conventional factories
do too much leading to losses
Focused factories
weill outproduce undersell and quickly gain comp adv over the complexed factories.
PWP STRAT
Divide a single facility into smaller focused units
both organizational level and physical
Benefit of PWP strat
Each unit will specialise in particular services and products improving efficiences.
Capacity flexibility
The ability to adjust production leevls quickly or switch between products and services.
