UPES – The Nation Builders University

Capacity Management

Centre for
Continuing Education
UPES – The Nation Builders University

• Estimation of equipment requirement

• Short term capacity modification

• Long term capacity planning (Expansion

alternatives)

Centre for
Continuing Education
UPES – The Nation Builders University

Estimation of equipment requirement

• Determine total process time

• Take efficiency and scrap into account

• Identify available time

• Determine equipment requirement

Centre for
Continuing Education
UPES – The Nation Builders University

The fabrication department of an organization needs to

supply 6000 parts to assembly department daily. The

organization works two shifts of 8 hours each. The

processing time is 2.50 minutes per unit and department

efficiency is 80%. Determine equipment requirement for

fabrication department

Centre for
Continuing Education
UPES – The Nation Builders University

A manufacturer has 7 machines that operate on two shift basis (8

Hours each shift). There are 250 working days in a year and 20 days

are reserved for scheduled maintenance of machines. Each

manufacturing unit takes 30 minutes of process time. Assume the

efficiency to be 100 %

• What is the capacity of the factory?

• If the manufacturer wants to meet the expected demand of 84000

units in a year, how many machines he should add?

Centre for
Continuing Education
UPES – The Nation Builders University

Component X
Efficiency 80%
Scrap 10%
1 hour per component

Component Y Product A
Efficiency 90% Efficiency 90%
Scrap 5% Scrap 0%
1 hour per component 0.5 hour per component

Component Z
Efficiency 70%
Scrap 20% 100 units required per day of 10 hours
1 hour per component

Centre for
Continuing Education
UPES – The Nation Builders University

ALTERNATIVES FOR SHORT TERM CAPACITY

MODIFICATION
• Increasing inventory
• Hire / layoff employees
• Overtime
• Employee training
• Job redesign
• Subcontracting
• Machine maintenance

Centre for
Continuing Education