Test 2 Flashcards
Capacity
The upper limit on the load an operating unit can handle.
What affects capacity needs?
Equipment
Space
Employee skills
What is the goal of strategic capacity planning?
To match long-term supply capabilities and predicted levels of long-term demand.
Overcapacity
Operating costs that are too high.
Undercapacity
Strained resources and possible loss of customers.
Key questions for capacity planning
What kind of capacity is needed?
How much is needed to match demand?
When is it needed?
Three capacity strategies
Leading
Following
Tracking
Leading capacity strategy
Build capacity for future demand increases
Following capacity strategy
Build capacity when demand exceeds current capacity
Tracking capacity strategy
Similar to following but in smaller increments.
Design (Theoretical) Capacity
Maximum output rate or service capacity an operation is designed for
Effective Capacity
Design capacity minus inefficiencies.
Cannot exceed design capacity.
Actual output
rate of output actually achieved - cannot exceed effective capacity
Efficiency equation
Actual output/effective capacity x 100%
Utilization equation
Actual output/design capacity x 100%
Determinants of effective capacity
Facilities (size, layout, transportation) Product and service factors (non-uniformity of output, product mix) Process Factors (productivity, quality) Human factors (Tasks, skills, turnover) Policy (Overtime) Operational (Materials, Breakdowns) Supply chain (Distributors) External (Regulations)
Bottleneck operation
an operation whose capacity is lower than other operations in a sequence.
What determines service capacity?
The need to be near customers
Degree of demand volatility
The inability to store services
Capacity cushion/ safety capacity
Extra capacity used to offset demand uncertainty
Capacity cushion equation
Capacity - expected demand
Demand Management Strategies
Strategies to shift demand from peak periods to slower periods.
How to calculate processing requirements
Add up total processing time for each product.