Using Capacity Measures for Operations Planning

Capacity needs must be translated into specific requirements for equipment and labor.
Example:
Juan Burger Co. is building a Fast-food Counter near Cagayan National High School. The outlet
will operate 16 hours per day, 360 days per year. The owners concluded that outlet should have
the capacity to handle a peak hourly demand of 100 customers. This peak hour of demand
happens during lunch break. The average customer purchase is:
1 pc. Hamburger or Cheeseburger (4-ounces)
1 bag of French Fries (4 ounces)
1 cup/glass 12-ounce soft drink
As a result, the owners would like to determine how many grills, deep fryers, soft drink spouts
are needed. A 36 X 36-inch grill cooks 48 ounces of burgers every 10 minutes, and a single-
basket deep fryer cooks 2 pounds of French fries in 6 minutes, or 20 pounds per hour. Lastly, one
soft drink spout dispenses 20 ounces of soft drink per minute, or 1,200 ounces per hour. These
effective capacity estimates are based on the equipment manufacturer’s studies of actual use
under normal operating conditions.
To determine the equipment needed to meet peak hourly demand, Juan Burger must translate
expected demand in terms of customers per hour into needs for grills, deep fryers, and soft drink
spouts.
With the above given information, compute for the number of grills, deep fryers, and soft drink
spouts needed to satisfy the peak demand.

QUESTION: WHAT IS THE THEORY OF CONSTRAINTS?

- It is a set of principles that focus on increasing total process throughput by maximizing
the utilization of all bottleneck work activities and workstations.
What is throughput?
- In operations management, it is the average number of goods or services completed per
time period by a process.
- In Theory of Constraints, it is viewed as the amount of money generated per time period
through actual sales. For most business organizations the goal is to maximize
throughput, thereby maximizing cash flow. Inherent in this definition is that it makes
little sense to make good or service until it can be sold, and that excess inventory is
wasteful.
 - In TOC, a constraint is anything in an organization that limits it from moving toward or
achieving its goal. Constraints determine the throughput of a facility, because they limit
production output to their own capacity.

Two Basic Types of Constraints:

1. Physical – associated with the capacity of a resource such as a machine, employee or
workstation. Physical constraints result in process bottlenecks. A bottleneck (BN) work
activity is one that effectively limits the capacity of the entire process. At a bottleneck,
the input exceeds the capacity, restricting the total output that is capable of being
produced. A nonbottleneck (NBN) work activity is one in which idle capacity exists.
2. Nonphysical constraint is environmental or organizational, such as low product demand
or an inefficient management policy or procedure. Examples are: inflexible work rules,
inadequate labor skills, and poor managing of workforce. It is not always possible to
remove nonphysical constraints.

ASSIGNMENT: CONTINUE TO READ MORE ABOUT HOW TO MANAGE NON-BOTTLENECK AND

BOTTLENECK MANAGEMENT