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2000 by Prentice-Hall, Inc. 2. Defining Capacity. Now:the rate of output from an OM system per unit of timeORthe rate at which the firm withdraws work from the system. 2000 by Prentice-Hall, Inc. 3. Supply Chain Capacity. Tactical perspectiveoutput drivenunits of output, hours workedstrategic perspectivecapabilitywhat you can and cannot domatch capabilities with marketing needs.
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1. Chapter 9 Capacity and Aggregate Planning
2. 2000 by Prentice-Hall, Inc 2 Defining Capacity Now:
the rate of output from an OM system per unit of time
OR
the rate at which the firm withdraws work from the system
3. 2000 by Prentice-Hall, Inc 3 Supply Chain Capacity Tactical perspective
output driven
units of output, hours worked
strategic perspective
capability
what you can and cannot do
match capabilities with marketing needs
4. 2000 by Prentice-Hall, Inc 4 Types of Capacity:Maximum Capacity (aka Design) Defined: The highest rate of output that a process can achieve
Calculation involves the following assumptions:
equally skilled workers
no time loss due to changeovers or product differences
no loss of capacity due to PM or planned downtime
no OT work or heroic employee efforts
Are these assumptions realistic?
5. 2000 by Prentice-Hall, Inc 5 Types of Capacity: Effective Capacity Defined: the output rate that managers expect for a given process
Why would you operate below maximum?
6. 2000 by Prentice-Hall, Inc 6 Types of Capacity: Demonstrated Capacity Defined: the actual level of output for a process over a period of time, i.e., the average of output over time
Why might this number be different than maximum or effective capacity?
7. 2000 by Prentice-Hall, Inc 7 Types of Capacity: Demonstrated Capacity Demonstrated capacity
what we actually observe
can be affected by numerous factors
problems with input
problems internally
nature of the product
new vs standard
8. 2000 by Prentice-Hall, Inc 8 Capacity within the Supply Chain Must deal with the issue of bottlenecks and system constraints.
Capacity defined by:
information systems
infrastructure
physical capacity
logistics capacity
supplier capacity
relationship management
9. 2000 by Prentice-Hall, Inc 9 Bottlenecks Must look for bottleneck
constraining resource
how identified
too much or too little inventory
overtime
why important
limits output
determines lead time
determines ability of system to make money
Keys to success
keep the bottlenecks busy
inventories/signals
invest in bottlenecks
10. 2000 by Prentice-Hall, Inc 10 Capacity - calculating Level of output of a plant or system is dependent on how it is organized
capacity in sequence
linear operations
capacity in parallel
multiple alternative operations
any machine can be used
11. 2000 by Prentice-Hall, Inc 11 Capacity - Sequential Capacity of a system or process is based on the operation with the lowest amount of capacity
Keys
convert into the same units of measurement
ensure that we are talking about the same dimensions
effective vs design vs demonstrated
capacity taken over the same time
12. 2000 by Prentice-Hall, Inc 12 We have a process that makes cans
Operation 1 - punches out tops and bottoms
2 lids for every can
produces 250 lids per minute
Operation 2 - body
1 body for every can
produces 175 bodies per minute
Operation 3 - mating
makes the can
produces 7500 cans per hour Capacity - Sequential
13. 2000 by Prentice-Hall, Inc 13 Capacity - Parallel Capacity of the system or operation is based on the sum of the capacities of the various machines that make up the operation.
Operation 3 has 4 machines
machine 1 - 90 pieces per minute
machine 2 - 110 pieces per minute
machine 3 -120 pieces per minute
machine 4 - 80 pieces per minute
Total capacity for operation 3 = 400 pieces/min
14. 2000 by Prentice-Hall, Inc 14 Capacity Management Tools: Calculating Capacity 1. Describe the general flow of activities within the process
2. Establish the time period
3. Establish a common unit
4. Identify the Maximum capacity for the overall process
5. Identify the Effective capacity for the overall process
6. Determine the Demonstrated capacity
7. Compare the Demonstrated, Effective and Maximum Capacities and take appropriate actions
15. 2000 by Prentice-Hall, Inc 15 Capacity Planning Capacity lead strategy
expand capacity in anticipation of growth
Capacity lag strategy
increase capacity after increase in growth
Average capacity strategy
expand capacity to coincide with average demandCapacity lead strategy
expand capacity in anticipation of growth
Capacity lag strategy
increase capacity after increase in growth
Average capacity strategy
expand capacity to coincide with average demand
16. 2000 by Prentice-Hall, Inc 16 Capacity Expansion
17. Capacity Expansion Strategies
18. 2000 by Prentice-Hall, Inc 18 Aggregate Production Planning (APP)
19. 2000 by Prentice-Hall, Inc 19 Inputs and Outputs to APP
20. Adjusting Capacity to Meet Demand
21. 2000 by Prentice-Hall, Inc 21 Strategy Details
22. 2000 by Prentice-Hall, Inc 22 Strategy Details
23. 2000 by Prentice-Hall, Inc 23 Level Production
24. 2000 by Prentice-Hall, Inc 24 Chase Demand
25. APP Using Pure Strategies
26. APP Using Pure Strategies
27. Level Production Strategy
28. 2000 by Prentice-Hall, Inc 28 Chase Demand Strategy
29. APP Using Mixed Strategies
30. 2000 by Prentice-Hall, Inc 30 Demand Management
31. 2000 by Prentice-Hall, Inc 31 Demand Distortion along the Supply Chain
32. 2000 by Prentice-Hall, Inc 32 Hierarchical Planning Process
33. 2000 by Prentice-Hall, Inc 33 Aggregate Planning for Services
34. 2000 by Prentice-Hall, Inc 34 Best Operating Levels
35. 2000 by Prentice-Hall, Inc 35 Inputs and Outputs to APP
36. 2000 by Prentice-Hall, Inc 36 Level Production
37. 2000 by Prentice-Hall, Inc 37 APP by Linear Programming
38. 2000 by Prentice-Hall, Inc 38 APP by the Transportation Method
39. 2000 by Prentice-Hall, Inc 39 The Transportation Tableau
40. 2000 by Prentice-Hall, Inc 40 Burruss’ Production Plan
41. 2000 by Prentice-Hall, Inc 41 Other Quantitative Techniques Linear decision rule (LDR)
payroll, staffing, over/undertime, inventory costs
Search decision rule (SDR)
find minimum cost combination of labor levels & production rates
Management coefficients model
uses regression analysis to improve consistency of planningLinear decision rule (LDR)
payroll, staffing, over/undertime, inventory costs
Search decision rule (SDR)
find minimum cost combination of labor levels & production rates
Management coefficients model
uses regression analysis to improve consistency of planning
42. 2000 by Prentice-Hall, Inc 42 Hierarchical Planning Process
43. 2000 by Prentice-Hall, Inc 43 Available-to-Promise
44. 2000 by Prentice-Hall, Inc 44 Available-to-Promise
45. 2000 by Prentice-Hall, Inc 45 Available-to-Promise
46. 2000 by Prentice-Hall, Inc 46 Yield Management
47. 2000 by Prentice-Hall, Inc 47 Yield Management
48. 2000 by Prentice-Hall, Inc 48 Yield Management
49. 2000 by Prentice-Hall, Inc 49 Yield Management
50. Best Operating Levels