Strategic Capacity Planning Flashcards
is the upper limit or ceiling on the load that an operating unit can handle.
Capacity`
True or False. The goal of capacity planning is to achieve a match between the short-term supply capabilities of an organization and the predicted level of long-term demand.
False. long-term supply*
What are the basic questions of capacity planning?
What kind of capacity is needed?
How much is needed?
When is it needed?
The ff are importance of capacity planning except:
a. Impacts ability to meet future demands
b. Globalization adds complexity
c. Major determinant of initial costs
d. Impacts short range planning
D. impacts short range planning. Long*
maximum output rate or service capacity an operation, process, or facility is designed for
Design capacity
Design capacity minus allowances such as personal time, maintenance, and scrap
Effective capacity
rate of output actually achieved–cannot
exceed effective capacity.
Actual Output
formula of efficiency
actual ouput/effective capacity
formula of utilization
actual output/design capacity
determinants of effective capacity
facilities, products and services, process factors, human factors, policy factors, operational factors, supply chain factors, external factors
Facilities
Design, location, layout, environment
Product/Service
Design, product/service mix
Process
quantity capabilities, quality capabilities
Human factors
job content, training & experiences, motivation & compensation, absenteeism and labor turnover
Operational
Scheduling, materials management, quality assurance, maintenance policies
External factors
Product standards, safety regulations, unions, pollution control standards
Builds capacity in anticipation of future demand increases
Leading capacity strategy
When demand exceeds current capacity
Following capacity strategy
Similar to Following Capacity Strategy, but it adds capacity in relatively small increments to keep pace with increasing demand.
Tracking capacity strategy
formula of capacity cushion
Capacity cushion= (100% - Utilization)
Steps for Capacity Planning
1 Estimate future capacity requirements
2 Evaluate existing capacity
3 Identify alternatives
4 Conduct financial analysis
5 Assess key qualitative issues
6 Select one alternative
7 Implement alternative chosen
8 Monitor results
relates to overall level of capacity
long-term forecasting capacity
Relates to variations from capacity requirements
short-term forecasting capacity
Capacity and location are closely tied
need to be near customers
Capacity must be matched with timing of demand
inability to store services
Peak demand periods
Degree of volatility of demand
An operationin a sequence of operations whosecapacity is lower than that of theother operations
Bottleneck operation
If the output rate is less than the optimal level, increasing output rate results in decreasing average unit costs
ECONOMIES OF SCALE
If the output rate is more than the optimal level, increasing the output rate results in increasing average unit costs
DISECONOMIES OF SCALE
