CAPACITY PLANNING

- Hitesh Raviya

Strategies for Matching Capacity and Demand

• Shifting Demand to Match Capacity

• Adjusting Capacity to Meet Demand

2005ã - Dwayne D. Gremler

Strategies for Shifting Demand to Match Capacity

• Use signage to communicate busy days and times

• Offer incentives to customers for usage during non-peak times

• Take care of loyal or regular customers first

• Advertise peak usage times and benefits of non-peak use

• Charge full price for the service--no discounts

• Use sales and advertising to increase business from current market segments

• Modify the service offering to appeal to new market segments

• Offer discounts or price reductions• Modify hours of operation• Bring the service to the customer

2005ã - Dwayne D. Gremler

Demand Too High Demand Too LowShift Demand

Strategies for Adjusting Capacity to Match Demand

• Stretch time, labor, facilities and equipment

• Cross-train employees• Hire part-time employees• Request overtime work from

employees• Rent or share facilities• Rent or share equipment• Subcontract or outsource

activities

• Perform maintenance renovations• Schedule vacations• Schedule employee training• Lay off employees

2005ã - Dwayne D. Gremler

Demand Too High Demand Too LowAdjust Capacity

Steps for Capacity Planning

• Estimate future capacity requirements• Evaluate existing capacity• Identify alternatives• Conduct financial analysis• Assess key qualitative issues• Select one alternative• Implement alternative chosen• Monitor results

Developing Capacity Alternatives

• Design flexibility into systems• Take stage of life cycle into account• Take a “big picture” approach to capacity

changes• Prepare to deal with capacity “chunks(large

amount)”• Attempt to smooth out capacity requirements• Identify the optimal operating level

STEPS

• Determine the demand• Determine the aggregate demand• Transform the aggregate demand for each

time period• Identify company policies• Determine unit costs• Develop alternative resource plans• Select the resource plan

MATERIAL REQUIREMENTS PLANNING

• COMPUTER BASED INFORMATION SYYSTEM FOR ORDERING AND SCHEDULING OF DEPENDENT DEMAND INVENTORIES.

OBJECTIVES

• TO IMPROVE CUSTOMER SERVICE

• TO REDUCE INVENTORY COSTS BY REDUCING INVENTORY LEVELS

• TO IMPROVE PLANT OPERATING EFFICIENCY BY BETTER USE OF PRODUCTIVE RESOURCES

PURPOSE

• CONTROL INVENTORY LEVELS

• ASSIGN OPERATING PRIORITIES

• ASSIGN CAPACITY TO LOAD PRODUCTION SYSTEM.

ADVANTAGES

• REDUCED INVENTORY• REDUCED IDLE TIME• REDUCED SET UP TIME• ABILITY TO CHANGE THE MASTER• PRODUCTION SCHEDULE• BETTER CUSTOMER SERVICE

DISADVANTAGES:

• LACK OF TOP MANAGEMENT COMMITMENT• PROBLEMS EVALUATING MRP SOFTWARE• IT DOESN’T AUTOMATICALLY CHECK STATUS

OF ORDERS AND EXPEDITE THEM.

BILLS OF MATERIAL

LISTS ALL OF THE SUBASSEMBLIES PARTS, AND RAW MATERIALS THAT GO INTO A PARENT ASSEMBLY SHOWING THE QUANTITIES REQUIRED.

TYPES:• SINGLE –LEVEL BOM :

that displays the assembly or sub-assembly with only one level of children. Thus it displays the components directly needed to make the assembly or sub-assembly

• MULTI-LEVEL BOM :that displays the highest-level item closest to the left margin and the components used in that item indented more to the right

• MULTI-LEVEL INDENTED BOM :It can also be visually represented by a product structure tree, although they are rarely used in the workplace