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Lecture Introduction to operations management - Chapter 12: Capacity planning
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Lecture Introduction to operations management - Chapter 12: Capacity planning
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In this chapter we will discuss: Facilities decisions, facilities strategy, sales & operations planning definition, cross-functional nature of S&OP, planning options, basic aggregate planning strategies, aggregate planning costs, aggregate planning example. | Operations Management Contemporary Concepts and Cases Chapter Twelve Capacity Planning Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 12 Outline Facilities Decisions Facilities Strategy Sales & Operations Planning Definition Cross-Functional Nature of S&OP Planning Options Basic Aggregate Planning Strategies Aggregate Planning Costs Aggregate Planning Example Hierarchy of Capacity Decisions (Fig. 12.1) Facilities decisions Aggregate planning Scheduling 0 6 12 18 24 Months Planning Horizon Scheduling Facilities decisions Aggregate Planning Definition of “Capacity” Capacity is defined as the maximum output that can be produced over a given period of time. Theoretical capacity primarily determined by Physical assets Labor availability Actual output (effective capacity) Accounts for downtime, shift breaks, etc. Is the capacity that should be used in planning Capacity Utilization Capacity utilization is defined relative to actual output and capacity: Utilization = actual output/capacity X 100% Capacity is seldom at 100% utilization. Facilities Decisions How much total capacity is needed? How large should each facility be? When is the capacity needed? Where should the facilities be located? What type of facilities/capacity are needed? Facilities Strategy Facilities strategy typically considers: Amount of capacity Size of the facilities Timing of capacity changes Facility locations Types of facilities needed for the long run Factors Affecting Facilities Strategy Predicted demand Cost of facilities Likely behavior of competitors Business strategy International considerations How Much?: Strategies for “Capacity Cushion” Capacity cushion = 100% – Utilization Three strategies Large cushion (e.g., make-to-order) Moderate cushion (cost of running out balanced with cost of excess capacity) Small cushion (e.g., make-to-stock) How Large? What is “Optimum” Unit Size? Economies of scale Production costs are not linear . | Operations Management Contemporary Concepts and Cases Chapter Twelve Capacity Planning Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 12 Outline Facilities Decisions Facilities Strategy Sales & Operations Planning Definition Cross-Functional Nature of S&OP Planning Options Basic Aggregate Planning Strategies Aggregate Planning Costs Aggregate Planning Example Hierarchy of Capacity Decisions (Fig. 12.1) Facilities decisions Aggregate planning Scheduling 0 6 12 18 24 Months Planning Horizon Scheduling Facilities decisions Aggregate Planning Definition of “Capacity” Capacity is defined as the maximum output that can be produced over a given period of time. Theoretical capacity primarily determined by Physical assets Labor availability Actual output (effective capacity) Accounts for downtime, shift breaks, etc. Is the capacity that should be used in planning Capacity Utilization Capacity utilization is defined relative to actual .
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