Slide Chapter 11 Capacity management

Transcription

1 Slide 11.1 Chapter 11 Capacity management

2 Slide 11.2 Capacity management Direct Design Operations management Develop Capacity management Deliver The market requires the availability of products and services The operation supplies... the capacity to deliver products and services Figure 11.1 A definition of capacity planning and control

3 Slide 11.3 Key operations questions In Chapter 11 Capacity planning and control Slack et al. identify the following key questions What is capacity management? How is capacity measured? What are the ways of coping with demand fluctuation?

4 Slide 11.4 What is capacity? Capacity means the scale of an operation. But this may not reflect the operation s processing capability. So we must incorporate a time dimension appropriate to the use of assets. For example 24,000 litres per day 10,000 calls per day 57 patients per session Etc.

5 Slide 11.5 The objectives of capacity management To provide an appropriate amount of capacity at any point in time. The appropriateness of capacity planning in any part of the operation can be judged by its effect on Costs Revenue Working capital Service level, in terms of Quality Speed Dependability Flexibility

6 Slide 11.6 The step in capacity planning and control Step 1. Measure aggregate capacity and demand Step 2. Identify the alternative capacity plans Step 3. Choose the most appropriate capacity plan Figure 11.2 The steps in capacity management

7 Slide Measure aggregate capacity Aggregate capacity of a hotel: rooms per night; ignores the numbers of guests in each room. Aggregate capacity of an aluminium producer: tonnes per month; ignores types of alloy, gauge and batch variations.

8 Slide Measure aggregate demand Figure 11.3 Aggregate demand fluctuations for four organizations Sources: Shutterstock/Cuiphoto, Shutterstock/yuyangc, Shutterstock/Light & Magic, Shutterstock/Lucky Photo

9 Slide 11.9 Input and output capacity measures for different operations Operation Input measure of capacity Output measure of capacity Airconditioner Machine hours available Number of units per week plant Hospital Beds available Number of patients treated per week Theatre Number of seats Number of customers entertained per week University Number of students Students graduated per year Retail store Sales floor area Number of items sold per day Airline Number of seats available on the sector Table 11.1 Input and output capacity measures for different operations Note: The most commonly used measure is shown in bold. Number of passengers per week

10 Slide Case Discussion Read the case: London Eye (Page 334) Question: What is the capacity of the London Eye?

11 Slide Case Discussion Hourly Capacity 1 full revolution per 30 minutes. Thus, the hourly capacity is: 2 revs 32 capsules 25 passengers/capsule = 1,600 passengers/hour Summer Weekly Capacity (April to mid-september) 10:00 a.m10:00 p.m. weekly capacity: 7 days 12 hours 1,600 passengers = 134,400 Winter Weekly Capacity (mid-september to March) - 10 am - 6:00 p.m. 7 days 8 hours 1,600 passengers = 89,600 Annual Design Capacity 365 days/year

12 Slide Productivity measures (Capacity vs Demand) p.331 Efficiency = Actual output Effective capacity Design capacity Planned loss of 59 hours Effective capacity Avoidable loss 58 hours per week 168 hours per week 109 hours per week Actual output 51 hours per week Utilization = Actual output Design capacity

13 Slide Ways of reconciling capacity and demand Demand Demand Demand Capacity Capacity Capacity Level capacity Absorb demand Chase demand Adjust output to match demand Demand management Change demand

14 Slide Level capacity Make to stock Absorb demand Keep output level Inventory Part finished Finished goods, or Customer inventory Make customer wait Queues Backlogs

15 Slide Chase demand Adjust output to match demand Hire Temporary labour Overtime Subcontract Fire Lay-off Short time 3rd party work

16 Slide Demand management Change demand Change pattern of demand. Develop alternative products and/or services.

17 Slide Manage the Level of Demand by: Pricing strategies Create Alternative products/services Modifying the time and location of delivery Communication efforts Developing reservation systems Developing complementary services

18 Slide Case Discussion Read the case: Working by the year (Page 339) Question: What do you see as being the major advantages and disadvantages to both the company and the staff of adopting the Annual Hours Work Plan?

19 Slide Class Discussion What is your capacity decisions? POOR Outlook < 1 POOR Outlook < 1 NORMAL Outlook = 1 GOOD Outlook > 1 NORMAL Outlook = 1 GOOD Outlook > 1

20 Slide Class Discussion What is your capacity decisions?

21 Long-term outlook for volume Increasing above current capacity Level with current capacity Decreasing below current capacity Slide Capacity management long and short-term outlook Decreasing below current capacity Short-term outlook for volume Level with current capacity Increasing above current capacity Reduce capacity (semi) permanently. For example, reduce staffing levels, reduce supply agreements. Plan to reduce capacity (semi) permanently. For example, freeze recruitment, modify supply agreements. Increase capacity temporarily. For example, increase working hours, and/or hire temporary staff, modify supply agreements. Reduce capacity temporarily. For example, reduce staff working hours, modify supply agreements. Maintain capacity at current level. Increase capacity temporarily. For example, increase working hours, and/or hire temporary staff, modify supply agreements. Reduce capacity temporarily. For example, reduce staff working hours, but plant to recruit, modify supply agreements. Plan to increase capacity above current level, plan to increase supply agreements. Increase capacity (semi) permanently. For example, hire staff, increase supply agreements. Figure Capacity management strategies are partly dependent on the long- and short-term outlook for volumes

22 Slide Group Case Freeman Biotest