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23 Cards in this Set
- Front
- Back
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Capacity Planning |
-long, medium, short range - Based on forecasted estimate of future demand -Facilities, Aggregate Planning, and Scheduling form a hierarchy of capacity about the planings of operations |
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Capacity |
-the maximum output that can be produced over a specific period of time -estimating capacity depends on reasonable assumptions about facilities, equipment, and workforce availability |
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Effective Capacity |
-obtained by subtracting downtime for maintenance, shift breaks, schedule changes, absenteeism, and other activities that decrease the capacity available |
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Capacity Planning |
1. Facility planning has a long-range component that determines whether more capacity is needed or less 2. At the aggregate Planning Level, expected workforce levels and corresponding production output levels are determined based on existing capacity 3. Scheduling consists of short-term decisions that allocates available capacity by assigning it to specific activities |
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Relationship Among Capacity Planning Decision Hierarchy |
Scheduling decisions often indicate a need for revised aggregate planning, and aggregate planning may uncover facility needs |
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Types of Capacity Measures |
1. Number of Units Produced 2. Tons Produced 3. Number of Customers served over a specified Period 4. Physical Asset Availability |
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Utilization |
1. The Relationship between actual output and capacity 2. (Actual Output/Capacity) * 100% 3. A useful measure for estimating how busy a facility is 4. In the short term, it is possible to operate above 100% utilization using such approaches as overtime or speeding up the line |
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Utilization by Type of Operation |
1. Continuous Flow Processes may have utilization near 100% 2. Assembly-line processes may set planned utilization at 80% to allow for flexibility to meet unexpected demand 3. Batch and job processes generally have even lower utilization |
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Facilities Considerations (long-range) |
-the amount of current capacity -the size of facilities -facilities locations -types of facilities needed |
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Factors Affecting Facilities Strategies |
-predicted demand -cost of facilities -likely behavior of competitors - Alignment to business strategy -International Considerations |
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Economies of Scale |
-larger facilities are generally more economical - Fixed Costs can be spread over more units of production - the cost of building and equipment does not increase linearly with volume -Transportation costs increase in one vs. two -Coordination Costs increase in larger facilities |
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Timing of Capacity Additions Factors |
1. Preempt the competition 2. Wait Until Demand Develops and the need for more capacity is clear |
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Common Types of Facilities |
1. Product-Focused 2. Market-Focused 3. Process-Focused 4. General Purpose |
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Aggregate Planning |
-The activity of matching supply of output demand over the medium range (6 months to year) -The term aggregate refers to planning for a limited number of product families at the macro level |
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Sales and Operations Planning |
1. Updated monthly and using a 12-month rolling planning horizon 2. Decisions related to the workforce are made concerning hiring, laying off, overtime, and subcontracting 3. Decisions regarding product output and inventory levels are made using the S&OP |
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Sales and Operations and Budgeting |
1. An Aggregate Plan should be the basis for initial budget development and for budget revisions as conditions warrant 2. Human resource planning is greatly affected by S&OP because planning for future production can result in hiring, layoffs, training, and overtime decisions |
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Demand Management |
Entails modifying or influencing Demand by: 1. Pricing 2. Advertising and Promotion 3. Backlogs and Reservations 4. Development of Complementary Offerings |
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Pricing |
differential pricing often is used to reduce peak demand or to build up demand in off-peak periods |
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Advertising and Promotion |
used to stimulate and/or smooth out demand |
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Backlogs and Reservations |
customers waiting for late orders (backlog) or reserving capacity in advance |
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Development of Complementary Offerings |
firms with seasonal products/services may seek products/services in demand at other times of the year |
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Strategies for Modifying Capacity |
1. Hiring and laying off employees 2. Using overtime and under-time 3. Using part-time or temporary labor 4. Carrying Inventory 5. Subcontracting |
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Chase vs. Level Strategies of Capacity Management |
1. Chase: refers to responding to market demand 2. Level: refers to speculating on demand and leveling production accordingly |
