Professional Documents
Culture Documents
Capacity Management in Industrial Engineering
Capacity Management in Industrial Engineering
( )
= + + = 0.4 200 0.5 25 0.1 120 $80.5k
B
EV
= + + = 0.4 60 0.5 40 0.1 20 $46k
C
EV
Choose decision B
(highest expected value)
Capacity Information Needed
Design capacity:
Maximum output rate under ideal conditions
A bakery can make 30 custom cakes per day when pushed at
holiday time
Effective capacity:
Maximum output rate under normal (realistic) conditions
On the average this bakery can make 20 custom cakes per
day
Implementing Capacity Decisions
Capacity flexibility
Plant, process, workers, outsourcing
Amount of capacity cushion
important in -to-order and services
Timing the capacity change
Leading [proactive]
Concurrent [neutral]
Lagging [reactive]
Size of the capacity increment
Capacity Expansion Strategies
Timing the Capacity Change
Other Capacity Planning Concepts
The concept of the focused factory (also called capacity
focus) holds that production facilities work best when
they focus on a fairly limited set of production objectives.
The plants within plants (PWP) concept extends
capacity focus ideas to an operational level.
Capacity flexibility allows rapid increase or decrease of
production levels, and can be achieved in three ways:
Flexible plants
Flexible processes
Flexible workers
Other Issues
Focused factories:
Small, specialized facilities with limited objectives
Plant within a plant (PWP):
Segmenting larger operations into smaller operating
units with focused objectives
Subcontractor networks:
Outsource non-core items to free up capacity for
what you do well
Capacity cushions:
Plan to underutilize capacity to provide flexibility
Service Capacity vs. Manufacturing Capacity
Capacity planning in services is different than in
manufacturing in three key ways:
Time
Goods can not be stored for later use
Capacity must be available to provide a service
when it is needed
Location
Service goods must be at the customer demand
point
Capacity must be located near the customer
Volatility of demand
Much greater in services than in manufacturing
Capacity Decisions
Capacity
maximum
capability to
produce
rated
capacity is
theoretical
effective
capacity
includes
efficiency
and
utilization
Capacity utilization
percent of available time spend working
Capacity efficiency
how well a machine or worker performs
compared to a standard output level
Capacity load
standard hours of work assigned to a
facility
Capacity load percent
ratio of load to capacity