1 / 21

Enhancing Operations Efficiency Through Capacity Management

Explore capacity management in operations to optimize resources and meet demand effectively. Learn about utilization rates, flexibility, and advantages of enhanced capacity requirements. Understand alternatives like outsourcing and building inventory for efficient production.

parkers
Download Presentation

Enhancing Operations Efficiency Through Capacity Management

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Operations management Session 4: More on Capacity Management

  2. More on Capacity Management • So far, we analyzed a process given the capacity. • Question: How much capacity do we need to meet demand? Operations Management

  3. Capacity Requirement Example • Kristen expects higher demand and would like to produce 26 dozen cookie (in one-dozen order sizes) a night. • How many ovens and mixers does Kristen need? • What are the utilization rates of Kristen and her roommate? Operations Management

  4. Capacity Requirement Example • Total throughput rate = 26 dozen/night = 6.5 dozen/hour Capacity of an oven = 6 dozen/hour Capacity of a mixer = 10 dozen/hour •  Need two ovens and one mixer Operations Management

  5. Capacity Requirement Example • Utilization rate of Kristen = 26*8/240 = 86.7% • Utilization rate of Roommate = 26*4/240 = 43.3% • What if Kristen would like to produce 36 dozen cookie (in one dozen order) a night? Is this possible? • Yes, by cross-training (both Kristen and her roommate) Operations Management

  6. Flexibility & Capacity • What is the capacity of Kristen and Roommate if they were cross-trained (to do the other person’s asks in addition to their own)? • Time taken per person per dozen cookies= (8+4)/2=6 min/dozen • 240/6=40 dozen/night • Flexible equipment and cross-training enable a higher utilization rate. Operations Management

  7. Utilization Rate & Flexibility • Flexible equipment: equipment that can produce several different products efficiently. • In the past, car manufacturers generally produced only one car type in a factory. • Today that is not good enough Operations Management

  8. Utilization Rate & Flexibility • For decades, mainstream models such as the Ford Taurus sold in such large volumes they could keep a plant or two running at full capacity for years. • Not only was the plant limited, but so was its costly equipment, much of which had to be scrapped when the model was dropped. Operations Management

  9. Variety and Customization • Growth of variety • Number of automobile lines sold in U.S.: • 1971: 41 • 1992: 65 • Total sales per model • 1950 Chevy Impala: 1.5M • 1990 Honda Accord: 0.5M • To be competitive, one needs to offer consumers many choices. This means the assembly line must be re-thought to allow for different car models. Operations Management

  10. What Are the Advantages and Disadvantages of Flexibility • Advantages: • Disadvantages: Operations Management

  11. What Are the Advantages and Disadvantages of Flexibility • Advantages: • Increasing utilization rates • GM originally produced 4 small cars in 4 facilities • It is possible to produce this number in one flexible facility • Equipment lasts longer • Better equipped to meet changing demands • Disadvantages: • Learning curve • Training Operations Management

  12. Flexibility of Car Manufacturers Operations Management

  13. Capacity Requirement Example • Kristen did a detailed market study and would like to have a capacity of 26 dozen cookies (in one-dozen order sizes) on Monday, Tuesday, Wednesday, Thursday nights, and a capacity of 16 dozen on Friday, Saturday and Sunday nights. • How many ovens and mixers does Kristen need? Operations Management

  14. Capacity Requirement Example • Maximum throughput rate = 26 dozen/night = 6.5 dozen/hour Capacity of an oven = 6 dozen/hour Capacity of a mixer = 10 dozen/hour • Two ovens and one mixer Operations Management

  15. Utilization Rate • What is the utilization rate of the oven on Friday night? • Throughput rate = 16 dozen/night = 4 dozen/hour • Capacity of an oven = 6 dozen/hour • Utilization Rate= Operations Management

  16. Capacity Requirement Example • Mattel’s demand for dolls is: • 5,000,000 dolls in November • 5,000,000 dolls in December • 200,000 every other month. • Each Mattel’s plant is capable of producing 500,000 dolls per month, how many plants should Mattel build? • Does Mattel have other alternatives? Operations Management

  17. Capacity Requirement ExampleSolution • The demand for dolls is: • 5,000,000 dolls in November • 5,000,000 dolls in December • 200,000 every other month. • Each Mattel’s plant is capable of producing 500,000 dolls per month, how many plants should Mattel build? • Max demand/ month=5,000,000 per month • If no inventory is held, need 5,000,000/500,000 plants=10 plants • 100% utilization in Nov, Dec • Only 4% utilization in other months Jan-Oct Operations Management

  18. Alternatives • Does Mattel have other alternatives? • Building inventory • What are the advantages? • What are the disadvantages? • No. of Plants= • Utilization per year= • Outsourcing Operations Management

  19. AlternativesSolution • Does Mattel have other alternatives? • Building inventory • What are the advantages? • What are the disadvantages? • Total Demand per year=12 million • Total Plant capacity per year=6 million/plant • No. of Plants=12/6 = 2 plants • Utilization per year= 12 million/(2*6 million) = 1= 100% • Outsourcing Operations Management

  20. What did we learn in this class? • Capacity planning • Capacity requirement calculation • Flexibility/variety • Impact of randomness/variability • Smooth production/inventory Operations Management

  21. Reminder • Wednesday, 1/29 • HW #1 due • Team name due • Solver installed on your laptop • Monday, 2/2 Quiz #1 • Wednesday 2/4 Timeshare Exchange Fair Case due • Monday 2/9 HW #2 due • Wednesday 2/11 Mid Term and Little Field code due

More Related