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Capacity and Aggregate Planning

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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Capacity and Aggregate Planning

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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

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