Strategic Capacity Management

1. Strategic Capacity Management Chapter 11 HHS III

2. Capacity Management in Operations • Capacity • Strategic Capacity Planning • Best Operating Level • Capacity Utilization Rate Capacity Utl = Capacity Used/Best Opt Level HHS III

3. Capacity Planning Concepts • Economies and Diseconomies of Scale • Experience Curve • Capacity Focus • Capacity Flexibility HHS III

4. Capacity Flexibility • Flexible Plants • Flexible Processes • Flexible Workers HHS III

5. Adding Capacity • Maintain System Balance • Frequency of Capacity Additions • External Sources HHS III

6. Determine Capacity Requirements • Use Forecasting Techniques • Calculate labor and equipment requirements • Project labor and equipment availability over the planning horizon Capacity Cushion HHS III

7. Service vs. Manufacturing • Time • Location • Volatility • Cannot store • Customer experience differences • Directly affected by consumer behavior HHS III

8. Proximity to Customer Business Climate Total Costs Infrastructure Quality of Labor Free Trade Zone Political Risk Government Barriers Trading Blocs Environmental Regulation Host Community Competitive Advantage Facility Location Issues HHS III

9. Location Methods • Factor-Rating System • Transportation Method of Linear Programming • Center of Gravity Method HHS III